By Peter Ricci
Construction spending in July was up 9.3 percent from last year in the latest data from the U.S. Census Bureau of the Department of Commerce.
Though construction spending did fall slightly from June by 0.9 percent to a seasonally adjusted annual rate of $834.44 billion, spending so far this year is 9.3 percent above the same time period in 2011.
Construction Spending – Gradually Improving
The Census Bureau also reported more specifically on private and public construction spending:
- Private construction spending, at $558.7 billion, was down 1.2 percent from June’s revised totals, with residential construction totals down 1.6 percent and nonresidential construction down 0.9 percent.
- As we’ve reported before, though, the important stats to follow are how current construction stats compare with post-boom lows, and as Bill McBride pointed out on Calculated Risk, private residential construction spending is up 19 percent from its post-boom low, and non-residential spending is up by 30 percent.
- Public construction spending was largely consistent with private; overall, spending was down 0.4 percent from June, and more specifically, education spending was down by 0.6 percent and highway construction spending was down 0.3 percent.
Construction Spending and the Housing Recovery
So where does all this data leave us? As Jed Kolko, the chief economist at Trulia, recently wrote, it means we’re far beyond the post-bubble lows and inching our way back to a regular housing market.
For instance, regarding housing starts, three of the past four months – April, June and July – saw housing starts higher than 750,000, a big increase from the 2011 and 2010 averages of 609,000 and 587,000, respectively. And construction spending, as this chart shows, has risen to post-boom levels. So rest assured, we’re getting there!