Monday, March 02, 2009

Construction Spending: January 2009

Today, the U.S. Census Bureau released their January read of construction spending again demonstrating the significant extent to which private residential construction is contracting particularly for single family structures which appears to have worsened significantly in recent months while non-residential spending continues to show firm signs of significant contraction.

With the tremendous weakening trend continuing, total residential construction spending fell 28% as compared to January 2008 and 56.90% from the peak set in March 2006.

Worse off though was private single family residential construction spending which declined 46% as compared to January 2008 and a truly grotesque 72.80% from the peak set in February 2006.

Non-residential construction spending, currently accounting for just under half of all private construction spending, has been expanding at a ever slower annual rate in recent months with January showing just a .34% increase as compared to January 2008 but posting the fourth consecutive monthly decline.

As was noted in prior posts, commercial real estate (CRE) appears to be clearly coming under some pressure with reports of increasing vacancy rates and falling prices and now a back-to-back monthly decline in spending.

Keep your eye on the last two charts in the months to come for a clearer indication of a pullback.

The following charts (click for larger versions) show private residential construction spending, private residential single family construction spending and private non-residential construction spending broken out and plotted since 1993 along with the year-over-year and peak percent change to each since 1994 and 2000 – 2005.