by Bill McBride on 11/01/2012
Three key construction spending themes:
• Private residential construction spending is still very low, but increasing. Residential construction declined sharply for four years following the peak of the housing bubble, and then move mostly sideways for another three years.
• Private non-residential construction spending picked up last year mostly due to energy spending (power and electric), but spending on office buildings, hotels and malls is still very low.
• Public construction spending is down 4% year-over-year and has been declining for several years.
The Census Bureau reported that overall construction spending increased in September:
The U.S. Census Bureau of the Department of Commerce announced today that construction spending during September 2012 was estimated at a seasonally adjusted annual rate of $851.6 billion, 0.6 percent above the revised August estimate of $846.2 billion. The September figure is 7.8 percent above the September 2011 estimate of $790.3 billion.
Private construction spending increased and public spending declined:
Spending on private construction was at a seasonally adjusted annual rate of $580.5 billion, 1.3 percent above the revised August estimate of $572.8 billion. … In September, the estimated seasonally adjusted annual rate of public construction spending was $271.1 billion, 0.8 percent below the revised August estimate of $273.4 billion.
This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.
Private residential spending is 58% below the peak in early 2006, and up 29% from the post-bubble low. Non-residential spending is 29% below the peak in January 2008, and up about 29% from the recent low.
Public construction spending is now 17% below the peak in March 2009 and at the post-bubble low.
On a year-over-year basis, private residential construction spending is now up 21%. Non-residential spending is also up 9% year-over-year mostly due to energy spending (power and electric). Public spending is down 4% year-over-year.