Posted on December - 06 - 2010
Construction Spending Increases 0.7% in October
Total construction spending rose 0.7% in October after a downward revised 0.4% gain in September. Construction spending was also revised down for the summer months. This is the first two month rise in construction spending in three years except for the March-April bump earlier this year, later reversed, caused by the homebuyer tax credit. But this is not the beginning of the construction recovery. That is still a few months away. The September-October rise in spending simply offsets the post homebuyer tax credit dip in spending.
The total construction spending trend remains flat to slightly down for a few more months. November construction employment rose 5,000 jobs but total hours worked on job sites dipped slightly. Also, the October gain came from residential remodeling and power, the two most ill-measured construction markets. Both of these markets experience huge month to month changes that are often quickly revised away or are reversed. This has happened in both markets several times in the last few years. Octobers’ 6.2% gain in remodeling and 8.8% gain in power are both inconsistent with other market data.
The forecast for construction spending has been revised again to push some activity previously expected in late 2010 ahead to 2011. This was necessary due to the revisions reducing the level of construction spending during the summer. This revision was mostly for single family homes and nonresidential buildings. The multi family forecast was raised for 2011 based on the upward revisions for multi family activity during the summer and a 1.7% gain in October.
The Reed Construction Data spending forecast projects a 10.9% drop in 2010 and then a 4.6% recovery in 2011 and a stronger 13.1% gain in 2012. Construction will expand faster than the rest of the economy once the recovery is underway in all sectors of the economy.
U.S. Total Construction Spending (billions of U.S. current dollars – annual figures)
Actual Forecast 2006 2007 2008 2009 2010 2011 2012 New Residential (% change 476.9 362.3 238.2 141.4 136.7 157.0 204.1 is year vs previous year) -1.7% -24.0% -34.2% -40.6% -3.3% 14.9% 30.0% Residential Improvements* 145.9 140.2 120.7 119.3 116.3 120.3 134.6 11.2% -3.9% -13.9% -1.1% -2.6% 3.5% 11.9% Non-residential Building 339.3 402.8 437.4 379.7 293.0 294.5 333.9 12.4% 18.7% 8.6% -13.2% -22.8% 0.5% 13.4% Non-building 207.4 247.8 270.9 273.7 268.7 280.0 290.6 (heavy engineering) 12.5% 19.5% 9.3% 1.0% -1.8% 4.2% 3.8% Total 1169.4 1153.0 1067.2 914.1 814.7 851.8 963.1 6.1% -1.4% -7.4% -14.3% -10.9% 4.6% 13.1%
*Residential Improvements include remodeling, renovation and replacement work.Actuals: U.S. Census Bureau, Department of Commerce.Forecasts and table: Reed Construction Data.
Similar Posts:
- Construction Spending Declines 1.4% in February
- Norway: Lower rate path from Norges Bank
- Commercial Buildings Lead Construction Starts Rise in May
- Construction Jobs Recovery Lags in the West
- Construction Spending Increases 1.4% in March
