Econoday Report: Construction Spending November 2, 2009

2009 Economic Calendar

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Construction Spending

Released on 11/2/2009 10:00:00 AM For September, 2009

	Prior	Consensus	Consensus Range	Actual
Construction Spending - M/M change	0.8 %	-0.2 %	-0.6 % to 0.5 %	0.8 %
Construction Spending - Y/Y change	-11.6 %			-13.0 %

Highlights
Construction spending was sharply higher than expected for September but a large downward revision to August was essentially offsetting. Overall construction spending advanced 0.8 percent in September after slipping a downwardly revised 0.1 percent in August. The increase in September was well above the consensus forecast for a 0.2 percent dip. However, the decrease in August is now significantly lower than the original estimate of a 0.8 percent gain. The boost in spending in September was led by a 3.8 percent surge in private residential outlays. Private nonresidential declined 1.8 percent and public outlays decreased 0.1 percent in the latest month.

On a year-ago basis, overall construction outlays slipped to minus 13.0 percent in September from minus 12.5 percent the previous month.

Overall, housing continues a moderate recovery. However, now that housing is on an uptrend, the nonresidential and public sectors are still in recession and it may be some time before they turn up.

Inclusive of revisions, September outlays were close to expectations. But there were other reports out at the same time that clearly were positive. Pending home sales spiked and ISM manufacturing rose further. Equities advanced on these other reports while Treasury yields firmed.

Market Consensus Before Announcement
Construction spending rebounded 0.8 percent in August after declining 1.1 percent in July. The boost in spending in August was led by a 4.7 percent jump in private residential outlays. In contrast, private nonresidential slipped 0.1 percent and public outlays dropped 1.1 percent in August. Looking ahead, based on the recent uptrend in housing starts (up in four of the last five months), the private residential component for outlays will likely post a gain for September. But high vacancy rates weigh on the nonresidential component as does state & local government revenue declines on public outlays.

Definition
The dollar value of new construction activity on residential, non-residential, and public projects. Data are available in nominal and real (inflation-adjusted) dollars. Why Investors Care

Over the last year, a decline in residential outlays has pulled down year-on-year growth for overall construction outlays. Nonresidential and public outlays are positive with nonresidential actually strong.

Data Source: Haver Analytics

2009 Release Schedule

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