Monday, November 02, 2020

Construction Spending Increased 0.3% in September

by Calculated Risk on 11/02/2020 10:24:00 AM

From the Census Bureau reported that overall construction spending decreased in June:

Construction spending during September 2020 was estimated at a seasonally adjusted annual rate of $1,414.0 billion, 0.3 percent above the revised August estimate of $1,410.4 billion. The September figure is 1.5 percent above the September 2019 estimate of $1,393.3 billion.
emphasis added
Private spending increased and public spending decreased:
Spending on private construction was at a seasonally adjusted annual rate of $1,074.9 billion, 0.9 percent above the revised August estimate of $1,065.6 billion. ...

In September, the estimated seasonally adjusted annual rate of public construction spending was $339.1 billion, 1.7 percent below the revised August estimate of $344.8 billion.
Construction Spending Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Residential spending is 10% below the previous peak.

Non-residential spending is 12% above the previous peak in January 2008 (nominal dollars), but has been weak recently.

Public construction spending is 4% above the previous peak in March 2009, and 29% above the austerity low in February 2014.

Year-over-year Construction SpendingThe second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is up 9.9%. Non-residential spending is down 6.0% year-over-year. Public spending is down 1.3% year-over-year.

Construction was considered an essential service in most areas and did not decline sharply like many other sectors, but it seems likely that non-residential, and public spending (depending on disaster relief), will be under pressure.  For example, lodging is down 15% YoY, multi-retail down 15% YoY, and office down 7% YoY.

This was below consensus expectations of a 0.9% increase in spending, however construction spending for the previous two months was revised up slightly, combined.