Economy Watch: A Look at the Slip in Construction Spending

The Census Bureau reported that U.S. construction spending dropped in November.

The Census Bureau reported on Friday that U.S. construction spending came in at an annualized rate of $975 billion during November, a drop of 0.3 percent compared with October. Private spending increased 0.3 percent for the month, but public spending more than offset that gain by falling 1.7 percent.

Residential construction was at an annualized rate of $352.7 billion in November, 0.9 percent above October’s $349.6 billion. On the other hand, non-residential construction posted an annualized rate of $345 billion in November, or 0.3 percent below October’s $346.1 billion.

Overall construction spending was up 2.4 percent in November compared with the same month a year ago, with private spending increasing 2 percent and public spending up 3.2 percent. Residential construction dipped 0.6 percent year-over-year, while non-residential construction gained 4.2 percent for the year.

Manufacturing still growing

According to the latest Manufacturing ISM Report On Business, which was released on Friday, the December Purchasing Managers Index came in at 55.5 percent, a decrease of 3.2 percentage points from November. Though down for the month—like most of the other indexes in the report—that still indicates growth for the manufacturing sector, for the 19th consecutive month.

The organization’s New Orders Index was 57.3 percent, a decrease of 8.7 percentage points from November, while the Employment Index registered 56.8 percent, an increase of 1.9 percentage points above November. The Prices Index registered 38.5 percent, down 6 percentage points from the November, indicating lower raw materials prices in December relative to November.

“Comments from the panel are mixed, with some indicating that falling oil prices have an upside while others indicate a downside,” notes Bradley J. Holcomb, chair of the Institute for Supply Management Manufacturing Business Survey Committee. “Other comments mention the negative impact on imported materials shipment due to the West Coast dock slowdown.”

Wall Street sputtered to a mixed conclusion on its first trading day of 2015 on Friday, with the Dow Jones Industrial Average up 9.92 points, or 0.06 percent. The S&P 500 lost 0.03 percent and the Nasdaq was down 0.2 percent.