Economy Watch: Construction Spending Edges Up in October
Spending on private construction came in at an annualized rate of $592.1 billion, 1.6 percent above September's total of $582.7 billion.
By Dees Stribling, Contributing Editor
The Census Bureau said on Monday that U.S. construction spending was up in October to an annualized rate of $872.1 billion, or 1.4 percent above the revised September rate of $860.4 billion. Year-over-year, the improvement is even better: The October 2012 figure is 9.6 percent above the October 2011 annualized rate of $795.7 billion.
In recent years, private construction spending has accounted for most monthly increases in the total, but this October both private and public spending pulled the total upward. Spending on private construction came in at an annualized rate of $592.1 billion, 1.6 percent above September’s total of $582.7 billion. The rate of public construction spending was $280.1 billion, or 0.8 percent above the revised September estimate of $277.7 billion.
Much of the growth in private construction spending has come from residential projects, as befitting the relatively robust recovery even single-family housing has seen in 2012. On a year-over-year basis, private residential construction spending was up 21 percent, while public residential construction spending was basically flat—down 1 percent.
Manufacturing activity takes a dip
The Institute for Supply Management reported on Monday that its purchasing managers index (PMI) declined to 49.5 in November from 51.7 a month earlier, which was worse than expected. The latest PMI reading reflects the lowest level since July 2009, when it came in at 49.2 and was definitely on the way down.
Any number below 50 means manufacturing is contracting, in the collective opinion of supply execs. And indeed, manufacturers expressed concerns that the federal spending cuts and tax increases scheduled to start on the first of next year would prove disruptive to the economy.
The organization’s New Orders Index registered 50.3, a decrease of 3.9 points from October, but it still indicative of growth in new orders—and in fact, that index was up for the third consecutive month. The Production Index registered 53.7, an increase of 1.3 percentage points, while the Employment Index registered 48.4, a decrease of 3.7 percentage points, which is the index’s lowest reading since September 2009. The Prices Index registered 52.5, reflecting a decrease of 2.5 percentage points but still growth.
Car sales spike in November
Autodata Corp. estimated on Monday that light vehicle sales were at a 15.54 million units in November, up 15 percent from November 2011 and 9 percent from last month. The November total represents is the highest number of sales since December 2007, just as the recession got started, and also a bounce back from October, when Sandy took a bite out of sales.
It was downhill all day for Wall Street, especially after the weak ISM numbers. The Dow Jones Industrial Average fell 59.98 points, or 0.46 percent. The S&P 500 dropped 0.47 percent, while the Nasdaq lost 0.27 percent.