Construction spending slides, but not all is lost
According to The U.S. Census Bureau of the Department of Commerce, construction spending during November 2012 was estimated at a seasonally adjusted annual rate of $866.0 billion, 0.3 percent below the revised October estimate of $868.2 billion, meanwhile improving 7.7 percent above November 2011 when it was at $804.0 billion.
So while spending hiccuped in November, during the first 11 months of 2011, construction spending amounted to $781.4 billion, 9.2 percent above the $715.4 billion for the same period in 2011.
Private versus public construction spending
The Department of Commerce reports that spending on private construction was at a seasonally adjusted annual rate of $589.8 billion, 0.2 percent below the revised October estimate, and residential construction actually increased 0.4 percent compared to October. Nonresidential private construction spending fell 0.7 percent in October, dragging the overall private construction spending amount down.
As government at all levels battles out how dollars are (or are not) spent, public construction spending fell in November by 0.4 percent, although educational construction was nearly the same and highway construction actually rose 0.5 percent over October’s revised estimates.
Will housing recover?
While construction spending is only one of many economic indicators we look to when we take housing’s pulse, it is an important link in the chain. Housing is poised for a recovery, having found its bottom, but Mark Vitner , managing director and senior economist at Wells Fargo said this fall that the fiscal cliff is the biggest situation that needs to be addressed. “Beyond concerns about the fiscal cliff, the economic improvement seems to be broadening,” he said.
“Housing will strengthen in 2013 even if the economy weakens because there is a demand for more construction, and the demand for apartments is rising at a faster rate than the need for more single-family homes,” Vitner forecast. “Unfortunately, apartment construction is focused on about 15 submarkets, so additions to supply will be uneven.