| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | -0.4% | -0.5% to -0.3% | 0.2% | -0.3% | -0.2% |
| Year over Year | 8.5% | 9.2% | 9.7% |
Highlights
Total construction spending rose 0.2 percent in November after a small upward revision to down 0.2 percent in October. The month-over-month increase is above the consensus of down 0.4 percent in an Econoday survey.
The rise was entirely due to a 0.9 percent increase in nonresidential spending which may reflect a push to get projects done before financing costs rise further and/or before colder weather sets in. Nonresidential construction expenditures include a hefty 6.5 percent gain in manufacturing and 4.1 percent rise in religious building, and smaller increases of 2.8 percent in transportation and 1.7 percent in lodging.
Spending on residential construction is down 0.5 percent in November from October which is concentrated in a 2.9 percent decline for single-family home building. Multi-unit family home spending is up 2.4 percent for the second month in a row, which spending on home improvement calculated by subtracting single- and multi-unit spending from total private residential spending is up 1.3 percent. The single-family home construction sector has been diminished by rising mortgage rates. However, more affordable multi-family units a smaller share of new residential construction have seen an increase in demand and homebuilders more willing to invest in these projects.
Current homeowners are turning to home renovation and repair rather than looking to enter the housing market to up- or downgrade their housing situation. Homeowners are unwilling to give up their lower rate mortgages at the present time.
The rise was entirely due to a 0.9 percent increase in nonresidential spending which may reflect a push to get projects done before financing costs rise further and/or before colder weather sets in. Nonresidential construction expenditures include a hefty 6.5 percent gain in manufacturing and 4.1 percent rise in religious building, and smaller increases of 2.8 percent in transportation and 1.7 percent in lodging.
Spending on residential construction is down 0.5 percent in November from October which is concentrated in a 2.9 percent decline for single-family home building. Multi-unit family home spending is up 2.4 percent for the second month in a row, which spending on home improvement calculated by subtracting single- and multi-unit spending from total private residential spending is up 1.3 percent. The single-family home construction sector has been diminished by rising mortgage rates. However, more affordable multi-family units a smaller share of new residential construction have seen an increase in demand and homebuilders more willing to invest in these projects.
Current homeowners are turning to home renovation and repair rather than looking to enter the housing market to up- or downgrade their housing situation. Homeowners are unwilling to give up their lower rate mortgages at the present time.
Market Consensus Before Announcement
After slipping 0.3 percent in October, construction spending in November is expected to fall 0.4 percent as residential building in particular remains weak.
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.
Description
Construction spending has a direct bearing on stocks, bonds and commodities because it is a part of the economy that is affected by interest rates, business cash flow and even federal fiscal policy. In a more specific sense, trends in the construction data carry valuable clues for the stocks of home builders and large-scale construction contractors. Commodity prices such as lumber are also very sensitive to housing industry trends.
Businesses only put money into the construction of new factories or offices when they are confident that demand is strong enough to justify the expansion. The same goes for individuals making the investment in a home.
A portion of construction spending is related to government projects such as education buildings as well a highways and streets. While investors are more concerned with private construction spending, the government projects put money in the hands of laborers who then have more money to spend on goods and services.
On a technical note, construction outlays for private residential, private nonresidential, and government are key inputs into three components of GDP--residential investment, nonresidential structures investment, and the structures portion of government expenditures.
That is why construction spending is a good indicator of the economy's momentum.
Businesses only put money into the construction of new factories or offices when they are confident that demand is strong enough to justify the expansion. The same goes for individuals making the investment in a home.
A portion of construction spending is related to government projects such as education buildings as well a highways and streets. While investors are more concerned with private construction spending, the government projects put money in the hands of laborers who then have more money to spend on goods and services.
On a technical note, construction outlays for private residential, private nonresidential, and government are key inputs into three components of GDP--residential investment, nonresidential structures investment, and the structures portion of government expenditures.
That is why construction spending is a good indicator of the economy's momentum.
