by Calculated Risk on 3/01/2007 03:04:00 PM

From the Census Bureau:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during January 2007 was estimated at a seasonally adjusted annual rate of $1,180.2 billion, 0.8 percent below the revised December estimate of $1,189.3 billion. The January figure is 1.2 percent below the January 2006 estimate of $1,194.5 billion.

Note: all dollars are seasonally adjusted, but not price adjusted.

Click on graph for larger image.

Construction spending can be divided into three parts: private residential construction, private nonresidential construction, and public construction.

Private residential construction spending continues to fall. Based on Starts, residential construction spending will continue to fall for most of 2007 as housing units currently under construction are completed.

One of the keys for the general economy is for private nonresidential construction to offset some of the declines in private residential construction. For private nonresidential, spending was flat from December to January, but spending is still 14.7% ahead of January 2006.

Unfortunately for the general economy, the typical pattern is for nonresidential investment in structures to follow residential construction with a typical lag of 4 to 5 quarters for structures (see Investment Lags).