Tuesday, December 01, 2020

Construction Spending Increased 1.3% in October

by Calculated Risk on 12/01/2020 10:38:00 AM

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

Construction spending during October 2020 was estimated at a seasonally adjusted annual rate of $1,438.5 billion, 1.3 percent above the revised September estimate of $1,420.4 billion. The October figure is 3.7 percent above the October 2019 estimate of $1,386.8 billion.
emphasis added
Both private and public spending increased:
Spending on private construction was at a seasonally adjusted annual rate of $1,093.7 billion, 1.4 percent above the revised September estimate of $1,078.9 billion. ...

In October, the estimated seasonally adjusted annual rate of public construction spending was $344.8 billion, 1.0 percent above the revised September estimate of $341.4 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 6% below the previous peak.

Non-residential spending is 10% above the previous peak in January 2008 (nominal dollars), but has been weak recently.

Public construction spending is 6% above the previous peak in March 2009, and 32% 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 14.5%. Non-residential spending is down 8.2% year-over-year. Public spending is up 3.7% 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 23% YoY, multi-retail down 19% YoY, and office down 8% YoY.

This was above consensus expectations of a 0.4% increase in spending, and construction spending for the previous two months was revised up (mostly private residential).