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Friday, June 29, 2007

May Construction Spending, Part I

by Calculated Risk on 6/29/2007 10:36:00 AM

From the Census Bureau: February 2007 Construction Spending at $1,170.8 Billion Annual Rate

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during May 2007 was estimated at a seasonally adjusted annual rate of $1,176.6 billion, 0.9 percent above the revised April estimate of $1,166.0 billion.
...
[Private] Residential construction was at a seasonally adjusted annual rate of $549.0 billion in May, 0.8 percent below the revised April estimate of $553.6 billion.

[Private] Nonresidential construction was at a seasonally adjusted annual rate of $343.1 billion in May, 2.7 percent above the revised April estimate of $334.1 billion.
Private Construction Spending Click on graph for larger image.

This graph shows private construction spending for residential and non-residential (SAAR in Billions). While private residential spending has declined significantly, spending for private non-residential construction has been strong.

The second graph shows the YoY change for both categories of private construction spending.

YoY Change Private Construction Spending The normal historical pattern is for non-residential construction spending to follow residential construction spending. However, because of the large slump in non-residential construction following the stock market "bust", it is possible there is more pent up demand than usual - and that the non-residential boom will continue for a longer period than normal.

This will probably be one of the keys for the economy going forward: Will nonresidential construction spending follow residential "off the cliff" (the normal historical pattern)? Or will nonresidential spending stay strong. I'll have some comments on this question later today.