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Economic Pulse: Construction Spending Continues Retreat

Tuesday, January 5, 2010

Construction spending declined 0.6% in November from the previous month to a seasonally adjusted annual rate of $900.1 billion, the Commerce Department’s Bureau of the Census reported Monday.  The department’s revised estimate for construction spending in October was $905.6 billion. The decline was the seventh straight monthly retreat.

Construction spending in November was 13.2% below the November 2008 estimated annual rate of $1,037 billion, the Commerce Department said. For the first 11 months of 2009, construction spending totaled an estimated $868.9 billion, 12.7% below the same period a year earlier.

Residential construction spending in November was estimated at an annual rate of $258.9 billion, down 1.6% from October, and 18.6% below the estimated annual rate for November 2008. Nonresidential spending in November was estimated at an annual rate of $641.2 billion, down 0.2% from October, and 10.9% below the rate of November 2008.

Spending on private construction in November was estimated at an annual rate of $581.2 billion, 0.7% below the revised October estimate of $585.5 billion. Spending was down 20% from the estimated annual rate of November 2008.

Private residential construction was down 1.6% from October, at an annual rate of $250.7 billion. Private nonresidential construction was unchanged from October, at an estimated annual rate of $330.5 billion. Compared to November 2008, private residential-construction spending was down 18.6%, while private nonresidential-construction spending was 20.6% lower.

Public-construction spending in November was estimated at an annual rate of $318.8 billion, 0.4% lower than the revised October estimate and down 2.7% from November 2008. Compared to November 2008, increases in construction spending were estimated for several public-construction categories, including office (up 9%), commercial (19.8%), health care (12.2%), transportation (18.8%), highway and street (5.7%), and conservation and development (15.2%). Lower rates of spending were reported for education (down 2.6), public safety (10.9%), and power (10.5%), with slightly lower spending rates estimated for sewage and waste disposal and water-supply construction.

Private-sector spending on nonresidential construction in November was sharply lower in several categories compared to November 2008. The steepest declines in annualized spending rates were estimated for lodging (-46%), office (-39%), commercial (-40.5%), and amusement and recreation (-40.4%). Lesser declines were reported for private-construction spending on health care, education, transportation, communication, and religious.