Anika R.

Khan, Economist
anika.khan@wachovia.com ● 704-715-0575

January 05, 2009

Construction Spending Fell Far Less Than Expected In November

Total construction spending fell 0.6 percent in November with an upward revision to September and October.
Residential construction spending fell 4.1 percent and nonresidential construction spending increased 1.0 percent.
We now expect nonresidential construction spending to contribute to economic growth in the fourth quarter.
Residential Construction Spending Nonresidential Construction Spending
• Total construction spending fell 0.6 percent in November and • Private nonresidential construction spending rose 0.7 percent on the
is now down 3.3 percent, year-over-year. Much of the drop month with large gains in lodging, power and manufacturing.
can be attributed to residential construction spending, which However, while private nonresidential construction spending
fell 4.1 percent on the month and is now down roughly 23 seems to defy gravity with stronger-than-expected figures, it tends
percent, year-over-year. to lag the economy and should contract in the coming quarters.
• Public construction spending rose 1.4 percent on the month.

Total Construction Private Nonresidential Construction Spending

Month to Month Percent Change Both Series are 3-Month Moving Averages
4% 4% 40% 40%

3% 3% 30% 30%

2% 2% 20% 20%

1% 1% 10% 10%

0% 0% 0% 0%

-1% -1% -10% -10%

-2% -2% -20% -20%

3-Month Annual Rate: Nov @ 7.5%
Total Construction: Nov @ -0.6% Year-over-Year Percent Change: Nov @ 11.9%
-3% -3% -30% -30%
01 02 03 04 05 06 07 08 95 97 99 01 03 05 07

Private Residential Construction Spending Private Manufacturing Construction Spending

Both Series are 3-Month Moving Averages Both Series are 3-Month Moving Averages
50% 50% 250% 250%
3-Month Annual Rate: Nov @ 41.2%
40% 40% Year-over-Year Percent Change: Nov @ 64.8%
200% 200%
30% 30%
150% 150%
20% 20%

10% 10% 100% 100%

0% 0% 50% 50%

-10% -10%
0% 0%
-20% -20%

Year-over-Year Percent Change: Nov @ -23.8% -50% -50%

-30% -30%
3-Month Annual Rate: Nov @ -8.4%
-40% -40% -100% -100%
93 95 97 99 01 03 05 07 95 97 99 01 03 05 07

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