Private construction drops 0.6% in June

posted at 12:15 pm on August 2, 2010 by Ed Morrissey

The Commerce Department released its review of construction data from June, and while the topline gain of 0.1% month-on-month is distinctly unimpressive, the breakdowns are worse.  The annualized rate trails June 2009 annualized estimate by almost 8%, when construction had taken a dive during the economic collapse.  The spending in the first half of 2010 is 11.2% lower than in the first half of 2009:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during June 2010 was estimated at a seasonally adjusted annual rate of $836.0 billion, 0.1 percent (±1.6%)* above the revised May estimate of $834.8 billion. The June figure is 7.9 percent (±1.6%) below the June 2009 estimate of $907.7 billion.

During the first 6 months of this year, construction spending amounted to $389.6 billion, 11.2 percent (±1.1%) below the $438.7 billion for the same period in 2009.

The numbers for the private sector show no sign of recovery, either:

Spending on private construction was at a seasonally adjusted annual rate of $527.6 billion, 0.6 percent (±1.3%)* below the revised May estimate of $530.9 billion. Residential construction was at a seasonally adjusted annual rate of $258.3 billion in June, 0.8 percent (±1.3%)* below the revised May estimate of $260.3 billion. Nonresidential construction was at a seasonally adjusted annual rate of $269.3 billion in June, 0.5 percent (±1.3%)* below the revised May estimate of $270.6 billion.

How did we get to the anemic 0.1% annualized growth rate?  Public spending, of course:

In June, the estimated seasonally adjusted annual rate of public construction spending was $308.4 billion, 1.5 percent (±2.2%)* above the revised May estimate of $303.9 billion. Educational construction was at a seasonally adjusted annual rate of $71.0 billion, 3.2 percent (±3.4%)* below the revised May estimate of $73.4 billion. Highway construction was at a seasonally adjusted annual rate of $83.2 billion, 0.1 percent (±6.7%)* above the revised May estimate of $83.2 billion.

The annualized overall construction rate peaked this year in April at $843 billion, still a large drop from June 2009′s rate of $907 billion.  The annualized private construction rate in June 2009 was $586 billion, but in June 2010 dropped 10% to $527 billion.  This also peaked in April at $538 billion, far below last year’s rate as well.

Public construction is also off from last June by 4.1%, but unlike the private sector, has grown throughout 2010.  A great deal of that growth has come in public-sector residential construction (31.4% since last June), and peaked in June.  Most non-residential construction in the public sector dropped in the past year (-5% overall), with a couple of exceptions.  Transportation construction increased 20% from just under $29 billion to $38 billion; sewage and waste disposal increased 9.3% from $23.4 billion to $25.6 billion; and conservation and development jumped 31.6% in a smaller category, going from $5.2 billion to $6.9 billion.

The continued drop in private-sector construction belies any talk of Recovery Summer.  The private sector is shrinking its investment in the future, not increasing it.  The only growth industries are in government pork.

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