econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 01 June 2015

Construction Spending Growth Stronger in April 2015. Backward Revisions Were Upward.

Written by Steven Hansen

The headlines say construction spending grew above expectations. The backward revision this month was significant enough to distort the month-over-month readings - and the rollling averages did improve.

Econintersect analysis:

  • Growth decelerated 0.1% month-over-month and Up 5.2% year-over-year. The deceleration was due to a 1.5% additional growth in the previous month (backward revision)
  • Inflation adjusted construction spending up 3.4% year-over-year.
  • 3 month rolling average is 4.9% above the rolling average one year ago, and up 1.2% month-over-month. As the data is noisy (and has so much backward revision) - the moving averages likely are the best way to view construction spending.

Unadjusted Construction Spending - Three Month Rolling Average Compared to the Rolling Average One Year Ago

US Census Analysis:

  • Up 2.2% month-over-month and Up 4.8% year-over-year (versus the reported 2.0% year-over-year growth last month).
  • Market expected +0.3 % to 1.6% month-over-month (consensus +0.7) versus the +2.2% reported

Construction spending (unadjusted data) was declining year-over-year for 48 straight months until November 2011. That was almost four years of headwinds for GDP.

Indexed and Seasonally Adjusted Total Construction Spending (blue line) and Inflation Adjusted (red line)

This month's headline statement from US Census:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during April 2015 was estimated at a seasonally adjusted annual rate of $1,006.1 billion, 2.2 percent (±1.5%) above the revised March estimate of $984.0 billion. The April figure is 4.8 percent (±2.0%) above the April 2014 estimate of $960.3 billion. During the first 4 months of this year, construction spending amounted to $288.7 billion, 4.1 percent (±1.5%) above the $277.3 billion for the same period in 2014.

PRIVATE CONSTRUCTION - Spending on private construction was at a seasonally adjusted annual rate of $725.2 billion, 1.8 percent (±1.2%) above the revised March estimate of $712.1 billion. Residential construction was at a seasonally adjusted annual rate of $353.1 billion in April, 0.6 percent (±1.3%)* above the revised March estimate of $351.1 billion. Nonresidential construction was at a seasonally adjusted annual rate of $372.1 billion in April, 3.1 percent (±1.2%) above the revised March estimate of $361.0 billion.

PUBLIC CONSTRUCTION - In April, the estimated seasonally adjusted annual rate of public construction spending was $280.9 billion, 3.3 percent (±2.8%) above the revised March estimate of $271.9 billion. Educational construction was at a seasonally adjusted annual rate of $63.3 billion, 3.6 percent (±4.3%)* above the revised March estimate of $61.2 billion. Highway construction was at a seasonally adjusted annual rate of $87.1 billion, 8.5 percent (±9.0%)* above the revised March estimate of $80.3 billion.

Unadjusted Total Construction Spending Year-Over-Year (blue line) and Month-over-Month (red line) Change

Unadjusted Private Construction Spending Year-Over-Year (blue line) and Month-over-Month (red line) Change

Unadjusted Public Construction Spending Year-Over-Year (blue line) and Month-over-Month (red line) Change

Private construction had been fueling construction growth.

Public construction is expanding 2.7% year-over-year (up 3.1% year-to-date) - all numbers are unadjusted. Private construction is up 6.0% year-over-year (up 4.5% year-to-date) - all numbers are unadjusted. Construction spending would have to increase by more than 45% to equal the average for 2006, 2007 and 2008. The sector is in a deep depression.

Caveats on the Use of Construction Spending Data

Although the data in this series is revised for several months after issuing, the revision is generally minor. This series is produced by sampling - and the methodology varies by sector being sampled.

The headline data is seasonally adjusted. Econintersect uses the raw unadjusted data.Econintersect determines the month-over-month change by subtracting the current month's year-over-year change from the previous month's year-over-year change. This is the best of the bad options available to determine month-over-month trends - as the preferred methodology would be to use multi-year data (but the New Normal effects and the Great Recession distort historical data).

The data set for construction spending is not inflation adjusted. Econintersect adjusts using the BLS Producers Price Index - subindex New Construction (PCUBNEW-BNEW). However in the inflation adjusted graph in this post, FRED does not have this series - andEconintersect has used Producer Price Index: Finished Goods Less Energy (PPIFLE), Monthly, Seasonally Adjusted which has similar characteristics.

Construction (which historically is an major economic driver) is a literal shadow of its former self. Its contribution to GDP is down $400 billion from its peak level in 2006. The main driver of construction spending is the private sector. Here is the historical breakdown. The graph below uses US Census seasonally adjusted data.

Obvious from the above graph that public spending on construction is falling off, while private spending is slightly trending up. The overall effect is that construction spending is near the same place it was in early 2010.

Related Posts:

Old Analysis Blog

New Analysis Blog

All Construction Spending Articles All Construction Spending Articles


>>>>> Scroll down to view and make comments <<<<<<



Permanent link to most recent post on this topic

Click here for Historical Releases Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.



You can also comment using Facebook directly using he comment block below.







Econintersect Economic Releases


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Democratic Development Lowers the Cost of Credit
Is Growing Household Debt An Economic Counter-Dynamic?
News Blog
Infographic Of The Day: Ten Interview Questions That Make You Sound Dumb
Early Headlines: Asia Stocks Down, Oil Up, Dollar And Gold Steady, UK Inflation, 'Moonlight' Wins Oscar, LSE Merger May Be Off, Greek Banks, India Going Green And More
Most Read Articles Last Week Ending 25 February
How British Businesses Helped The Confederacy Fight The American Civil War
Where You Can Surf A Lot For A Little In The EU
'I Can Live With Either One': Palestine, Israel And The Two-state Solution
Where Snapchat's Users Come From
What We Read Today 26 February 2017
INAUGURATION DAY: A Bad Lip Reading Of Donald Trump's Inauguration
Did The Dodd-Frank Act Make The Financial System Safer?
A Close Look At The Decline Of Homeownership - Part Five Of Five
Do Institutional Investors Chase Returns?
Infographic Of The Day: How To Survive A Deadly Snake Bite
Investing Blog
The Week Ahead: Reality And Stock Prices
Snapchat Still Has Some Growing Up To Do
Opinion Blog
What Do You Call A Lie Constructed From Other Lies?
Why Winning The French Presidential Election Could Be A Poisoned Chalice
Precious Metals Blog
Deflation And Gold: A Contrarian View
Live Markets
24Feb2017 Market Close: Wall Street Rose From Session Lows To Close In The Green Near The Unchanged Line, Short-Term Indicators And Analysts Questioning Continuing Bull Run
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government





























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved