Construction Spending Continues Housing-Induced Rally

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The U.S. Census Bureau announced on Thursday that the seasonally adjusted rate, or SAAR, of construction spending in November increased 1 percent on the month and 5.9 percent on the year to $934.4 billion. For the first 11 months of the year, total construction spending is up 5 percent, at $828.4 billion.

The construction spending report can be cut into two segments in two ways: between residential and nonresidential construction spending, and between public and private construction spending. The split and relative growth rates of these components can help shed some light on the strength of various parts of the market and the economy.

The SAAR of residential spending in November increased 1.7 percent on the month and 16 percent on the year to $351 billion, or about 37.5 percent of total construction spending. SAAR non-residential spending increased 0.6 percent both on the month and on the year to $583.4 billion, accounting for the remaining 62.5 percent of spending.

The SAAR of private construction spending increased 2.2 percent on the month and 8.6 percent on the year to $659.4 billion, or about 70.5 percent of total spending. Of this, $345.5 billion, or about 52.4 percent, was residential spending. The SAAR of public construction spending fell 1.8 percent on the month and 0.2 percent on the year, accounting for the remaining 29.5 percent of spending.

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