January 4, 2021
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Construction spending (the green bars above) rose 0.9% in November after having risen 1.6% in October after having declined 0.2% in September. Thus, construction spending is recovering and is now above to its pre-recession pace.
Private construction spending (excluding the government sector) rose 1.2% in November after having risen 1.6% in October after having declined 0.2% in September. It continues to recover from the recession caused caused by the imposition of the nationwide quarantine to combat the spread of the corona virus.
Within the private construction spending category, residential spending jumped 2.7% in November after having risen 3.2% in October after 0.9% in September. In fact, the pace of residential construction is significantly faster now than it was prior to the recession.. In the past 12 months residential construction spending has risen 16.1%. The housing sector is on fire as new home sales are at the fastest pace since 2006. Mortgage rates of 2.7% certainly help. As does the fact that renters in expensive metropolitan areas are fleeing the city and buying homes in less expensive suburbs as well as homes in resort communities in places like Lake Tahoe, the Jersey shore, and the mid-Atlantic beaches.
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Private nonresidential construction declined by 0.8% in November after falling 0.6% in October after falling 1.6% in September. Virtually every category of nonresidential spending declined in November. At this point we do not need new or bigger factories, there is ample office space available, as well as retail space. This sector will eventually come back, but that is still a ways down the road.
Public sector construction declined 0.2% in November after having risen 1.6% in October and having fallen 0.3% in September. This category can be quite volatile on a month-to-month basis, but in the past year such spending has risen 3.1%.
Stephen Slifer
NumberNomics
Charleston, SC
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