What really happened in construction over the last two years?
Construction activity was marginally better in 2010 than originally thought and was worse in 2011. Heavy engineering construction was worse, while nonresidential was better. Heavy engineering was significantly worse in 2011, with power construction taking a huge hit.
These are the major takeaways from the Census Bureau’s annual revision of construction spending data. Each year with the release of the May construction spending report, the U.S. Census Bureau provides revised data for the previous two years, based on more complete data than were available when the numbers were first reported. Here is a brief synopsis of the major adjustments to the data.
Total Construction Spending
Total construction spending was revised up $0.9 billion for 2010 (+0.1% from the pre-revision numbers) and down $11.5 billion for 2011 (-1.5%). So far this year (January through May), the average for the seasonally adjusted at an annual rate (SAAR) numbers was revised up $3.2 billion (+0.4%).
U.S. Total Construction Spending Revisions | |||
| 2010 | 2011 | 2012† | |
| New Single-family | 0 | 1,436 | 1,687 |
| % Change from original report | 0.0% | 1.3% | 1.5% |
| New Multifamily (1) | 407 | 525 | 836 |
| 1.7% | 2.4% | 3.6% | |
| New Residential (2) | 407 | 1,961 | 2,523 |
| 0.3% | 1.5% | 1.8% | |
| Residential Improvements (3) | 0 | -1,760 | -1,266 |
| 0.0% | -1.5% | -1.1% | |
| Total Residential (4) (5) | 406 | 199 | 1,257 |
| 0.2% | 0.1% | 0.5% | |
| Nonresidential Building | 1,497 | 5,035 | 5,577 |
| 0.5% | 1.8% | 1.9% | |
| Heavy Engineering (Non-Building) | -966 | -16,777 | -3,622 |
| -0.4% | -6.3% | -1.3% | |
| Total (5) | 940 | -11,542 | 3,211 |
| 0.1% | -1.5% | 0.4% | |
†Year-to-date average of monthly seasonally adjusted data (average for January through May). | |||
Nonresidential Building Construction
Nonresidential building construction spending was revised up $1.5 billion (+0.5%) for 2010 and $5.0 billion (+1.8%) for 2011. The year-to-date SAAR average was up $5.6 billion (+1.9%).
Manufacturing construction spending was the category with the largest dollar adjustments, up $2.2 billion (+5.9%) and $4.2 billion (+11.3%) in 2011. The year-to-date SAAR average was up $4.0 billion (+9.4%). The upward revision in manufacturing construction spending reduced the decline for 2010 from 33% to 29% and swung the 2011 number from a 2.4% decline to a 2.6% increase.
The other large dollar adjustment was retail construction spending for 2010, down $1.1 billion (-2.6%).
U.S. Nonresidential Construction Spending Revisions | |||
| 2010 | 2011 | 2012† | |
| For Lease | -489 | 492 | 2,058 |
| % Change from original report | -0.5% | 0.6% | 2.3% |
| Lodging | 306 | 342 | 1,149 |
| 2.7% | 4.0% | 12.5% | |
| Office | 277 | 169 | -186 |
| 0.7% | 0.5% | -0.5% | |
| Commercial (mainly retail) | -1,072 | -19 | 1,096 |
| -2.6% | 0.0% | 2.4% | |
| Institutional | -258 | 352 | -529 |
| -0.2% | 0.2% | -0.3% | |
| Health Care | -535 | -253 | -1,131 |
| -1.3% | -0.6% | -2.7% | |
| Education | 178 | -358 | -72 |
| 0.2% | -0.4% | -0.1% | |
| Religious | 80 | 89 | 117 |
| 1.5% | 2.2% | 3.0% | |
| Public Safety | 35 | 243 | 158 |
| 0.3% | 2.4% | 1.5% | |
| Amusement/Recreation | -16 | 631 | 399 |
| -0.1% | 4.1% | 2.6% | |
| Manufacturing | 2,244 | 4,191 | 4,047 |
| 5.9% | 11.3% | 9.4% | |
| Total (1) | 1,497 | 5,035 | 5,577 |
| 0.5% | 1.8% | 1.9% | |
†Year-to-date average of monthly seasonally adjusted data (average for January through May). | |||
Heavy Engineering (Non-Building) Construction Spending
Heavy engineering (non-building) construction spending saw a small downward revision for 2010, down $1.0 billion (-0.4%), but a large downward adjustment for 2011, off $16.8 billion (-6.3%). The year-to-date SAAR average was reduced $3.6 billion (-1.3%).
The biggest and most surprising revision was the large downward adjustment for power construction spending in 2011, down $15.9 billion (-17.7%). We and other analysts believed that there had been and continued to be significant investment in power infrastructure since last year. Now we learn that, instead of increasing 14.4% in 2011, spending fell 5.1%. The downward revision of power spending for 2011 was so large relative to the smaller downward revision to the 2012 numbers that the April 2012 year-to-date not seasonally adjusted (NSA) power construction spending was up 42.5% from the same period in 2011 versus the pre-revision increase of 20.3%.
U.S. Heavy Engineering (Non-Building) | |||
| 2010 | 2011 | 2012† | |
| Transportation | 108 | -676 | -1,807 |
| % Change from original report | 0.3% | -1.9% | -5.1% |
| Communication | -531 | -284 | -395 |
| -2.9% | -1.6% | -2.3% | |
| Power | -595 | -15,919 | -1,768 |
| -0.8% | -17.7% | -1.8% | |
| Highway | -128 | 125 | 478 |
| -0.2% | 0.2% | 0.6% | |
| Water and Sewer | -55 | -465 | -509 |
| -0.1% | -1.2% | -1.4% | |
| Conservation & Development | 235 | 442 | 379 |
| 3.4% | 6.4% | 6.5% | |
| Total (1) | -966 | -16,777 | -3,622 |
| -0.4% | -6.3% | -1.3% | |
†Year-to-date average of monthly seasonally adjusted data (average for January through May). | |||
New Residential Construction Spending
The 2010 residential construction spending revisions were minor with total residential construction spending up $0.4 billion (+0.2%), which came from an upward revision in multifamily construction spending. The 2011 overall adjustment was even smaller — total residential construction spending was $0.2 billion higher (+0.1%), but there were some notable revisions for the various components. Single-family construction spending was revised up $1.4 billion (+1.3%) and multifamily construction spending $0.5 billion (+2.4%) while residential improvement spending was revised down $1.8 billion (-1.5%), leaving the 2011 total virtually unchanged from the originally reported total. The year-to-date SAAR average was $1.3 billion higher (+0.5%) for total residential, which included new
residential construction being revised up $2.5 billion (+1.8%) and residential improvements being revised down $1.3 billion (-1.1%).
U.S. Residential Construction Spending Revisions | |||
| 2010 | 2011 | 2012† | |
| New Single-family | 0 | 1,436 | 1,687 |
| % Change from original report | 0.0% | 1.3% | 1.5% |
| New Multifamily (1) | 407 | 525 | 836 |
| 1.7% | 2.4% | 3.6% | |
| New Residential (2) | 407 | 1,961 | 2,523 |
| 0.3% | 1.5% | 1.8% | |
| Residential Improvements (3) | 0 | -1,760 | -1,266 |
| 0.0% | -1.5% | -1.1% | |
| Total Residential (4) (5) | 406 | 199 | 1,257 |
| 0.2% | 0.1% | 0.5% | |
†Year-to-date average of monthly seasonally adjusted data (average for January through May). | |||
