by Calculated Risk on 9/04/2007 10:00:00 AM

From the Census Bureau: July 2007 Construction Spending at $1,169.1 Billion Annual Rate

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during July 2007 was estimated at a seasonally adjusted annual rate of $1,169.1 billion, 0.4 percent below the revised June estimate of $1,173.2 billion. The July figure is 2.0 percent below the July 2006 estimate of $1,192.9 billion.

During the first 7 months of this year, construction spending amounted to $657.7 billion, 3.4 percent below the $680.9 billion for the same period in 2006.
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[Private] Residential construction was at a seasonally adjusted annual rate of $534.0 billion in July, 1.4 percent below the revised June estimate of $541.8 billion.

[Private] Nonresidential construction was at a seasonally adjusted annual rate of $346.0 billion in July, 0.4 percent above the revised June estimate of $344.5 billion.

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.

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.

The question is: Will we see the normal pattern? I think the answer is yes.