Construction Spending Up 0.2 Percent in September

By November 1, 2011Economy

The Census Bureau announced that construction spending rose 0.2 percent in September, a slowdown from the 1.6 percent increase in August. All of this increase came from the private sector, with residential construction (up 0.9 percent) outpacing nonresidential construction (up 0.3 percent). Overall private construction grew 0.6 percent, but public spending on construction dropped by 0.6 percent.

Breaking these numbers down further, single-family and multi-family home construction rose 0.5 percent and 0.2 percent, respectively, for the month. Over the past year, however, multi-family housing has accounted for all of the net growth in the residential sector, with the level of construction for multi-family homes up 6.5 percent. Single-family housing was down 0.1 percent over the same time frame.

For non-residential private construction spending, the largest monthly increases have come in the health care, transportation, lodging and the educational sector. Manufacturing construction spending fell 0.4 percent in September, but year-over-year, manufacturers have increased construction by 4.1 percent.

Public construction spending has been down significantly over the course of the past year, falling 9.2 percent since September 2010. Infrastructure, educational and residential projects experienced the largest declines over the past year. However, for the month of September, there were some notable increases in the infrastructure areas such as highways and streets, sewage and waste disposal and power.

Overall, the news that private construction is growing is a positive, but it would be nice to see this growth more broad-based. Weakness in manufacturing construction, for instance, is a result of recent weaknesses in the sector and anxieties about the global economy. A rebound in the global economy would erase this doubt and increase construction investment within the sector.

At the same time, growth in public-sector construction will remain weak in light of fiscal challenges at the local, state and federal levels.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM), where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

Leave a Reply