November construction spending drop surprisingly small | Notes from Jim Haughey

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Notes from Jim Haughey
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November construction spending drop surprisingly small

Jim Haughey

RCD Chief Economist

Jan 05, 2009

The largest monthly increases were for power ($3.863 billion), highway paving ($3.165 billion) ,manufacturing ($2.495 billion), public safety building, mostly police stations ($1.225 billion), office ($0.861 billion) and education, mostly high schools ($0.647 billion). Each of these markets has already experienced a slowdown in project starts from declining tax receipts and a weakened outlook for space demand so the recent strong gains in construction spending will reverse soon.

The largest monthly decreases were for single family homes ($10.636 billion), residential remodeling ($3.913 billion), communications facilities ($1.573 billion), retail and other commercial buildings ($1.084 billion) and multi family housing ($0.704 billion). Each of these declines is on track with an underlying weakening trend. The retail weakness reflects declining retail sales for almost a year which has postponed small store remodeling projects and caused the stoppage of a few malls under construction. The recent drop in spending for communications facilities results from a cutback in network expansion and improvements due to borrowing problems for some carriers and to projects postponed due to a recession slowdown in network traffic growth.

Reed Construction Data’s monthly construction spending forecast will be posted by tomorrow. The overall outlook is largely unchanged.