Not a Surprise, Construction Was Weak in 2009

On February 1 the Census Bureau told us that the value of construction put in place in 2009 was $939.1 billion. That was a plunge of 12.4 percent from the $1,072.1 billion spent in 2008.

Indeed, it was the first year that construction spending has been below $1 trillion since 2003. Nearly all forecasters expect further declines in 2010 and probably 2011 as well because the expected decline in nonresidential construction will more than offset the increases in residential spending. Click here to read the full post and comment (Insights subscribers) »

ISM, Construction & Savings Rate Provide Good News

On June 1, the Institute of Supply Management (ISM) reported its manufacturing index rose to 42.8 percent in May from 40.1 in April. That’s the highest level since the 43.4 of September 2008.

This is very good news because the ISM states that an index above 41.2 is consistent with growth in real GDP. This is despite the fact that the index has to be above 50.0 to indicate that the manufacturing sector is growing. Click here to read the full post and comment (Insights subscribers) »

Surprisingly Good News on Construction

Today the Census Bureau reported that construction spending in March ran at a seasonally adjusted annual rate of $969.7 billion. That was 0.3 percent above the revised February estimate of $967.1 billion and 11.1 percent below a year earlier.

Actual construction spending during the first quarter of 2009 was $209.5 billion. That was 10.9 percent below last year, a much smaller decline than most forecasters expected.

Residential construction was down 31.6 percent in the first quarter from a year earlier. The level was $58.2 billion.

Nonresidential construction was $151.3 billion, an increase of 0.8 percent from last year. Spending on highways and streets was down 1.9 percent, but that will surely turn around as a result of the American Recovery and Reinvestment Act (ARRA)

Total public construction in March was at a seasonally adjusted annual rate of $308.7 billion, up 2.6 percent from March 2008. For the first quarter, actual public construction expenditures were $61.1 billion, an increase of 2.4 percent from last year.

All forecasters expect a decline in construction spending in 2009. However, if it were to hold even close to the small declines seen in March and the entire first quarter, that would be really good news.