Construction Spending Growth Continued in November 2011

Construction spending improved in the month of November 2011 on a nominal basis and just showed its first back-to-back year-over-year gain in 49 months. However, the performance was mixed when adjusted for inflation.

US Census Analysis:

  • Up 1.2% month-over-month and Up 0.5% year-over-year
  • Market expected Up 0.2% to 0.5%

Econintersect analysis:

  • Up 0.7% month-over-month and Up 0.8% year-over-year
  • Inflation adjusted construction spending Up 1.2% month-over-month – and down 5.5% year-over-year.

Construction spending (unadjusted data) was declining year-over-year for 47 straight months until October 2011. That is almost four years of headwinds for GDP. November 2011 is the second month of year-over-year construction spending expansion.

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during November 2011 was estimated at a seasonally adjusted annual rate of $807.1 billion, 1.2 percent (±1.6%)* above the revised October estimate of $797.4 billion. The November figure is 0.5 percent (±1.9%)* above the November 2010 estimate of $803.0 billion.

During the first 11 months of this year, construction spending amounted to $724.8 billion, 2.5 percent (±1.1%) below the $743.6 billion for the same period in 2010.

PRIVATE CONSTRUCTION

Spending on private construction was at a seasonally adjusted annual rate of $522.3 billion, 1.0 percent (±1.0%)* above the revised October estimate of $517.3 billion. Residential construction was at a seasonally adjusted annual rate of $243.7 billion in November, 2.0 percent (±1.3%) above the revised October estimate of $238.9 billion. Nonresidential construction was at a seasonally adjusted annual rate of $278.6 billion in November, nearly the same as (±1.0%)* the revised October estimate of $278.5 billion.

PUBLIC CONSTRUCTION

In November, the estimated seasonally adjusted annual rate of public construction spending was $284.9 billion, 1.7 percent (±2.2%)* above the revised October estimate of $280.1 billion. Educational construction was at a seasonally adjusted annual rate of $71.9 billion, 0.5 percent (±3.8%)* above the revised October estimate of $71.5 billion. Highway construction was at a seasonally adjusted annual rate of $82.9 billion, 1.9 percent (±5.4%)* above the revised October estimate of $81.3 billion.

In November 2011, public sector construction is down 5.6% year-over-year. Private construction is up 4.5% year-over-year (all numbers are unadjusted).  2011 year-to-date, public sector construction down 6.8%, and private construction up 0.1% (all numbers are unadjusted).

Inflation adjusted construction spending (which compares apples to apples between time periods) remains down 5.5% year-over-year.

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).

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 graph below uses US Census seasonally adjusted data (updated through October 2011).

z

The main driver of construction spending is the private sector. Here is the historical breakdown. The graph below uses US Census seasonally adjusted data (updated through October 2011).

Related Articles:

All Construction Spending Articles

Share this Econintersect Article:
  • Print
  • Digg
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks
  • LinkedIn
  • Wikio
  • email
  • RSS
This entry was posted in Construction Spending and tagged , , , , . Bookmark the permalink.










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, 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.