Slowing housing market pulls total construction spending lower

Construction spending fell -.8% MoM (consensus -.3%) in October, matching the one year low set in July. September's figure was revised slightly lower to +.2% from +.3% originally reported.

Residential construction fell -2% MoM (-15.6% YoY) while non-residential rose +.1% MoM (+16.1% YoY). It appears that non-residential construction is no longer able to offset the weakness in the new home sector. Residential construction is expected to remain weak for the foreseeable future, until the excess inventories are worked off.

Public construction projects grew +.8% MoM, while private expenditures fell -1.4% MoM. Private non-residential spending, on hospitals, hotels, offices, etc, fell -.5% MoM, the largest decline in over a year. Over the past year, public construction spending has risen +14.6% while private spending has declined -4.9%. Within the public category, state and local spending has risen 16% YoY while federal spending has fallen -1.6% YoY. Government spending tends to be focused on things like schools, highways, and office buildings.