Total Construction Spending and its Major Components:
The U.S. Census Bureau reported that total construction
spending rose 1.0% in November to $934.4 billion at a seasonally adjusted
annual rate (SAAR) after increasing 0.9% in October. Year-to-date not
seasonally adjusted (NSA) construction spending was 5.0% higher than the same
period in 2012.
The release also included significant revisions to the
September and October spending data. September spending was revised up by $15.4
billion, 1.7% of the previously reported number. October spending was revised
up by $16.6 billion, 1.8% of the previously reported number. Roughly two-thirds
of the revisions were due to large revisions in residential improvements
spending.
Nonresidential building construction was up 0.8% to $316.5
billion (SAAR) in November after jumping 4.2% in October. Year-to-date spending
was almost flat, down 0.1% (NSA) from the same period in 2012. Construction
spending numbers for September and October were revised up by $7.0 billion and
$8.8 billion, respectively—2.4% and 2.9% of their respective previously
reported numbers.
Heavy engineering (non-building) construction spending moved
higher (barely) after two months of decline, up 0.3% to $267.0 billion (SAAR)
in November following a 1.1% fall in October. Year-to-date spending was 2.3%
(NSA) lower than the same period in 2012. September and October construction
spending numbers were revised down $3.3 billion and $4.3 billion,
respectively—1.2% and 1.6% of their respective previously reported spending
levels.
Total residential construction spending, which includes
improvements, increased 1.7% in November to $351.0 billion (SAAR) following a
0.3% decrease in October. New residential construction spending, which excludes
improvements and which has been increasing for over two years, advanced 1.4% to
$214.9 billion in November following a 0.3% increase in October. Year-to-date
NSA total residential construction spending was up 17.1%, and new residential
construction was up 29.6% from the same period in 2012.
Total residential construction spending was revised up $11.6
billion for September and $12.2 billion for October—3.5% and 3.7% of their
respective previously reported numbers. The overwhelming proportion of these
revisions was due to the residential improvements construction spending data.
For September, spending was revised up $10.8 billion. For October, spending was
revised up $10.5 billion. This was 8.7% and 8.6% of their respective previously
reported spending numbers.
|
U.S. Total Construction Spending
(billions of U.S. current dollars) |
||||||||
|
|
Current Monthly (1)
(latest actual values) |
3-Month Moving Average
|
Year-to-Date (NSA)
|
|||||
|
|
Sep-13
|
Oct-13
|
Nov-13
|
Sep-13
|
Oct-13
|
Nov-13
|
Jan-12 to
Nov-12 |
Jan-13 to
Nov-13 |
|
New Single-family
|
172.4
|
171.7
|
174.8
|
171.1
|
171.9
|
173.0
|
121.1
|
155.4
|
|
Month-over-Month % Change
|
0.5%
|
-0.4%
|
1.8%
|
0.8%
|
0.5%
|
0.6%
|
|
|
|
Year-over-year % Change (NSA)
|
23.8%
|
18.3%
|
18.1%
|
27.3%
|
23.4%
|
20.1%
|
21.2%
|
28.4%
|
|
New Multifamily (2)
|
38.8
|
40.2
|
40.2
|
37.8
|
39.0
|
39.7
|
25.2
|
34.1
|
|
|
1.6%
|
3.7%
|
-0.1%
|
1.4%
|
3.4%
|
1.7%
|
|
|
|
|
31.5%
|
31.7%
|
26.9%
|
36.6%
|
36.0%
|
35.1%
|
20.9%
|
35.1%
|
|
New Residential (3)
|
211.2
|
211.9
|
214.9
|
208.8
|
211.0
|
212.7
|
146.3
|
189.5
|
|
|
0.7%
|
0.3%
|
1.4%
|
0.9%
|
1.0%
|
0.8%
|
|
|
|
|
25.0%
|
20.5%
|
19.6%
|
27.8%
|
24.6%
|
21.7%
|
21.2%
|
29.6%
|
|
Residential Improvements (4)
|
134.9
|
133.1
|
136.0
|
126.6
|
129.3
|
134.7
|
118.7
|
120.8
|
|
|
12.5%
|
-1.3%
|
2.2%
|
-0.2%
|
2.2%
|
4.2%
|
|
|
|
|
0.0%
|
15.0%
|
1.4%
|
-6.0%
|
1.1%
|
5.5%
|
4.2%
|
1.8%
|
|
Total Residential (5) (6)
|
346.1
|
345.1
|
351.0
|
335.4
|
340.3
|
347.4
|
265.0
|
310.4
|
|
|
5.0%
|
-0.3%
|
1.7%
|
0.5%
|
1.5%
|
2.1%
|
|
|
|
|
13.7%
|
18.2%
|
12.6%
|
12.1%
|
14.1%
|
14.9%
|
12.9%
|
17.1%
|
|
Nonresidential Building
|
301.2
|
313.8
|
316.5
|
301.1
|
305.5
|
310.5
|
275.0
|
274.9
|
|
|
-0.1%
|
4.2%
|
0.8%
|
1.5%
|
1.4%
|
1.6%
|
|
|
|
|
0.2%
|
3.8%
|
8.1%
|
-0.1%
|
1.4%
|
3.9%
|
5.6%
|
-0.1%
|
|
Heavy Engineering (Non-Building)
|
269.3
|
266.2
|
267.0
|
271.2
|
269.4
|
267.5
|
248.8
|
243.2
|
|
|
-1.3%
|
-1.1%
|
0.3%
|
0.2%
|
-0.7%
|
-0.7%
|
|
|
|
|
2.5%
|
-8.5%
|
-15.6%
|
3.5%
|
-1.1%
|
-7.4%
|
7.8%
|
-2.3%
|
|
Total (6)
|
916.5
|
925.1
|
934.4
|
907.7
|
915.1
|
925.3
|
788.8
|
828.4
|
|
|
1.4%
|
0.9%
|
1.0%
|
0.7%
|
0.8%
|
1.1%
|
|
|
|
|
5.7%
|
4.4%
|
1.1%
|
5.3%
|
5.0%
|
3.8%
|
8.7%
|
5.0%
|
|
(1) Monthly levels are seasonally adjusted at annual rates
(SAAR figures).
(2) New Multifamily = New Private Multifamily + New Public Multifamily - Public Improvements (estimated by Reed Economics) (3) New Residential = New Single-family + New Multifamily (4) Residential Improvements include remodeling, renovation and replacement work. Number also includes Reed Economics estimate of improvements to public housing. (5) Total Residential = New Single-family + New Multifamily + Residential Improvements. (6) Total may not equal the sum of its components due to rounding. Source: Census Bureau, U.S. Department of Commerce. |
||||||||
Total public construction spending fell 1.8% at a seasonally
adjusted (SA) rate in November after surging 3.1% in October. Year-to-date NSA
public construction spending was 2.7% lower than over the same period in 2012.
Total private construction spending climbed 2.2% in November
following no change in October. Year-to-date NSA private construction spending
was up 8.8% from the same period in 2012.
|
Public and Private Construction Spending
(billions of U.S. current dollars) |
||||||||||||
|
|
Monthly Figures (1)
(latest actual values) |
3-Month Moving Average
|
Year-to-Date (NSA)
|
Annual
|
||||||||
|
|
Sep-13
|
Oct-13
|
Nov-13
|
Sep-13
|
Oct-13
|
Nov-13
|
Jan-12 to
Nov-12 |
Jan-13 to
Nov-13 |
2010
|
2011
|
2012
|
|
|
Private Spending
|
644.7
|
644.9
|
659.4
|
632.7
|
638.7
|
649.7
|
529.2
|
575.8
|
500.6
|
501.6
|
577.9
|
|
|
Month-over-Month % Change
|
2.9%
|
0.0%
|
2.2%
|
1.1%
|
0.9%
|
1.7%
|
|
|
|
|
|
|
|
Year-over-year % Change (NSA)
|
8.2%
|
5.5%
|
2.0%
|
8.4%
|
7.3%
|
5.2%
|
15.0%
|
8.8%
|
-14.9%
|
0.2%
|
15.2%
|
|
|
Public Spending
|
271.8
|
280.2
|
275.0
|
275.0
|
276.4
|
275.7
|
259.6
|
252.6
|
304.0
|
286.4
|
279.0
|
|
|
|
-2.0%
|
3.1%
|
-1.8%
|
-0.1%
|
0.5%
|
-0.3%
|
|
|
|
|
|
|
|
|
0.5%
|
2.1%
|
-1.0%
|
-0.8%
|
0.3%
|
0.6%
|
-2.2%
|
-2.7%
|
-3.5%
|
-5.8%
|
-2.6%
|
|
|
Total Federal Spending
|
22.5
|
24.0
|
23.1
|
23.3
|
23.3
|
23.2
|
25.2
|
21.6
|
31.1
|
31.7
|
27.4
|
|
|
|
-3.0%
|
6.5%
|
-3.7%
|
-2.0%
|
-0.1%
|
-0.2%
|
|
|
|
|
|
|
|
|
-9.6%
|
-13.4%
|
-13.9%
|
-11.6%
|
-13.2%
|
-12.0%
|
-13.6%
|
-14.4%
|
9.5%
|
1.7%
|
-13.5%
|
|
|
Federal Nonresidential
Spending |
21.3
|
22.6
|
21.9
|
21.9
|
21.9
|
21.9
|
23.7
|
20.2
|
28.4
|
29.1
|
25.8
|
|
|
|
-2.1%
|
6.0%
|
-3.0%
|
-1.9%
|
0.0%
|
0.2%
|
|
|
|
|
|
|
|
|
-9.5%
|
-14.4%
|
-13.5%
|
-11.7%
|
-13.6%
|
-12.1%
|
-11.3%
|
-14.7%
|
8.5%
|
2.4%
|
-11.4%
|
|
|
Federal Residential
Spending |
1.2
|
1.4
|
1.2
|
1.4
|
1.4
|
1.3
|
1.5
|
1.3
|
2.7
|
2.6
|
1.6
|
|
|
|
-15.7%
|
15.2%
|
-15.6%
|
-4.3%
|
-0.7%
|
-6.4%
|
|
|
|
|
|
|
|
|
-11.8%
|
6.6%
|
-21.4%
|
-10.4%
|
-5.8%
|
-10.3%
|
|
|
21.1%
|
-5.7%
|
-38.2%
|
|
|
Total State & Local Spending
|
249.3
|
256.2
|
251.9
|
251.7
|
253.2
|
252.4
|
234.4
|
231.0
|
272.8
|
254.8
|
251.7
|
|
|
|
-1.9%
|
2.8%
|
-1.7%
|
0.0%
|
0.6%
|
-0.3%
|
|
|
|
|
|
|
|
|
1.7%
|
3.4%
|
0.4%
|
0.3%
|
1.6%
|
1.9%
|
-0.8%
|
-1.5%
|
-4.8%
|
-6.6%
|
-1.2%
|
|
|
State & Local
Nonresidential Spending |
245.0
|
251.8
|
247.7
|
247.0
|
248.7
|
248.1
|
230.1
|
226.9
|
265.3
|
248.8
|
247.0
|
|
|
|
-1.7%
|
2.8%
|
-1.6%
|
0.1%
|
0.7%
|
-0.2%
|
|
|
|
|
|
|
|
|
1.9%
|
3.6%
|
0.7%
|
0.3%
|
1.7%
|
2.1%
|
-0.3%
|
-1.4%
|
-5.5%
|
-6.2%
|
-0.7%
|
|
|
State & Local Residential
Spending |
4.2
|
4.4
|
4.2
|
4.7
|
4.5
|
4.3
|
4.3
|
4.2
|
7.6
|
6.0
|
4.7
|
|
|
|
-14.7%
|
3.6%
|
-3.4%
|
-3.3%
|
-3.3%
|
-5.4%
|
|
|
|
|
|
|
|
|
-6.8%
|
-6.5%
|
-14.2%
|
1.2%
|
-3.6%
|
-9.2%
|
-21.8%
|
-4.1%
|
31.3%
|
-21.3%
|
-21.5%
|
|
|
Monthly levels are seasonally adjusted at annual rates
(SAAR figures).
Source: Census Bureau, U.S. Department of Commerce. |
||||||||||||
The Economy:
Congress passed and the president signed into law a $1.1
trillion appropriations bill, funding federal government operations for the
current fiscal year (through September 30). This is a sign compromise can work
and the warring political factions can at least accomplish some of the basic
functions they were elected to perform.
The next big test for the Washington politicians is the need
to raise the federal debt ceiling by the end of February. If the government
were to hit the debt ceiling, the result would be an almost complete shutdown
of the federal government and default of Treasury obligations. A default would
seriously hurt the credit of the U.S. government, result in substantial
disruption of the U.S. economy, and cost billions of dollars in future interest
payments due to higher interest rates on U.S. securities. Even holding off
raising the debt ceiling until the last minute (the usual Washington practice)
would create disruptions to the economy and the financial markets.
Overall, the economy appears to be improving. Simply
providing funding for government operations is a plus for the economy.
Certainly the recent harsh winter weather will hurt the economy in the short
run and show up in the first quarter numbers. But much of that will be reversed
in subsequent months when the weather improves.
The Federal Reserve announced it will reduce its purchases
of long-term assets from $75 billion per month in January (which was a
reduction from its long standing purchase of $85 billion of assets per month
under its Quantitative Easing program) to $65 billion per month starting in
February. The Fed seems to be on course to reduce the size of its monthly
long-term asset purchases by $10 billion each month. Once the Fed is no longer
accumulating long-term assets, it will begin to allow its holdings of those
assets to run off (or, if necessary, sell them)—presumably by increasing the
amount of the sales/runoff by $10 billion per month each month. So far, the
Fed’s action has had only a minor impact on long-term interest rates.
The risks to economic growth and the Reed construction
forecast have decreased. The largest risk to the forecast in the near term is
the federal debt ceiling.
Risks to the Economy
and the Forecast:
Major risks to the economy include:
·
Failure to raise the debt ceiling in time to
prevent a government shutdown and default on Treasury securities
·
Sharp reductions in government spending in the
short run as part of a deal to raise the debt ceiling
·
Too aggressive action on the part of the Federal
Reserve as it unwinds its asset purchase program, resulting in a sustained
spike in interest rates
·
Sovereign debt default by one or more European
governments
·
One or more European governments abandon the
euro
·
A sudden, significant increase in oil prices for
a prolonged period
If any one of these events occurs, economic growth will be
reduced and the probability of recession will be increased. The result will
also be lower construction spending than currently forecast by Reed.
The Forecast:
The Reed forecast assumes the above risks are avoided or are
minimized and that overall economic growth advances at a moderate pace this
year and next. Nonresidential building construction appears to have plateaued
and will slowly strengthen throughout this year and beyond as the economy
strengthens.
Heavy engineering (non-building) construction is generally
holding its own despite some recent slippage and will soon rebound, improving
this year and beyond. The slow pace of restoration of federal funding for
infrastructure projects is the primary obstacle to faster growth for the sector.
In the meantime, states and localities are often turning to the private sector
to help fund new, badly needed infrastructure projects. These public-private
partnerships are becoming the new normal.
Total construction spending is forecast to increase 10.2% in
2014 and 11.7% in 2015 as nonresidential and heavy engineering construction
improve and residential construction continues to expand.
|
U.S. Total Construction Spending
(billions of U.S. current dollars) |
|||||||
|
|
Actual
|
Forecast
|
|||||
|
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
|
New Single-family
|
105.3
|
112.6
|
108.2
|
132.0
|
167.7
|
202.5
|
250.6
|
|
Year-over-year % Change
|
-43.3%
|
6.9%
|
-3.9%
|
22.0%
|
27.0%
|
20.7%
|
23.7%
|
|
New Multifamily (1)
|
35.9
|
24.1
|
22.7
|
27.8
|
37.3
|
43.3
|
47.8
|
|
-30.0%
|
-32.9%
|
-5.7%
|
22.6%
|
33.8%
|
16.2%
|
10.5%
|
|
|
New Residential (2)
|
141.2
|
136.7
|
130.9
|
159.9
|
205.0
|
245.8
|
298.4
|
|
|
-40.4%
|
-3.2%
|
-4.2%
|
22.1%
|
28.2%
|
19.9%
|
21.4%
|
|
Residential Improvements (3)
|
112.7
|
112.5
|
121.8
|
126.7
|
130.6
|
143.5
|
158.7
|
|
-6.6%
|
-0.2%
|
8.3%
|
4.0%
|
3.1%
|
9.9%
|
10.6%
|
|
|
Total Residential (4) (5)
|
253.9
|
249.1
|
252.7
|
286.5
|
335.5
|
389.3
|
457.1
|
|
-29.0%
|
-1.9%
|
1.4%
|
13.4%
|
17.1%
|
16.0%
|
17.4%
|
|
|
Nonresidential Building
|
375.7
|
290.4
|
284.0
|
298.5
|
299.5
|
323.0
|
350.3
|
|
-14.2%
|
-22.7%
|
-2.2%
|
5.1%
|
0.3%
|
7.9%
|
8.5%
|
|
|
Heavy Engineering (Non-Building)
|
273.5
|
265.0
|
251.3
|
272.0
|
264.3
|
278.6
|
299.2
|
|
|
0.5%
|
-3.1%
|
-5.2%
|
8.2%
|
-2.8%
|
5.4%
|
7.4%
|
|
Total (5)
|
903.2
|
804.6
|
788.0
|
857.0
|
899.3
|
990.9
|
1,106.6
|
|
-15.4%
|
-10.9%
|
-2.1%
|
8.7%
|
4.9%
|
10.2%
|
11.7%
|
|
|
(1) New Multifamily = New Private Multifamily + New Public
Multifamily - Public Improvements
(estimated by Reed Economics) (2) New Residential = New Single-family + New Multifamily (3) Residential Improvements include remodeling, renovation and replacement work. Number also includes Reed Economics estimate of improvements to public housing. (4) Total Residential = New Single-family + New Multifamily + Residential Improvements. (5) Total may not equal the sum of its components due to rounding. Source: Census Bureau, U.S. Department of Commerce. Forecast: Reed Construction Data. |
|||||||
Source: Reed
Construction Data
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