Fed Fuels Ongoing Recovery of U.S. Construction

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source: http://www.flickr.com/photos/wwworks/

Source: http://www.flickr.com/photos/wwworks/

On Monday, following a shutdown-induced delay in reporting, the U.S. Census Bureau released construction spending data for both September and October. Following a 0.3 percent sequential contraction in September, the seasonally adjusted value of construction put in place increased 0.8 percent on the month and 5.3 percent on the year to an annual rate of $908.4 billion. Construction spending this year to date is up 5 percent compared to 2012, at $747 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.

Total residential spending declined 0.5 percent on the month but increased 17.4 percent on the year to $283.5 billion and accounted for about 32.8 percent of total construction spending. Nonresidential spending increased 1.6 percent on the month but declined 0.7 percent on the year to $579.6 billion and accounted for about 67.2 percent of total construction spending.

Private construction spending declined 0.5 percent on the year but increased 6.6 percent on the year to $586.8 billion and accounted for about 70 percent of total construction spending. Public spending increased 3.9 percent on the month and 2.3 percent on the year to $276.3 billion and accounted for about 30 percent of total spending.

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