Happy New Year! Construction Spending is Slipping.

OK, so that is a bit alarmist, but based on recently released data from the Department of Commerce's U.S. Census Bureau, it is true. In November 2015, construction spending was estimated at a seasonally adjusted annual rate of $1,122.5 billion, which is 0.4 percent lower than the revised October estimate of $1,127.0 billion. Spending in the private and public sectors decreased. Private construction spending clocked in at seasonally adjusted annual rate of $828.2 billion (0.2 percent below October 2015's revised figure) and public construction came in at $294.3 billion (1 percent below October's revised number).

The figure below, produced by Bill McBride at the Calculated Risk Blog, shows the trends in construction spending dating back to 1993. I added the references to the housing boom and TIGER Program (more on this later) for reference points.

Despite the decline in spending in November, every cloud is a silver lining, and there are a few this month. Let us start with the fact that this month's somewhat sad November 2015 construction spending number is 10.5 percent higher than that of November 2014. The construction market had a very healthy 2015. Secondly, the residential market is way off its bottom and is now almost double (if you allow for some generous rounding) from its lowest point. And it is not just housing: non-residential is way off its 2011 lows and is trending higher. 

Public construction trended northward in 2015, although the trend was clipped towards the end of the year. It has steadily decreased since the enactment of the Transportation Investment Generating Economic Recovery (TIGER) funding program that was a part of the American Recovery and Reinvestment Act of 2009. Given those investments and the general consensus that our Nation's infrastructure is in dire need of some TLC, you would expect a stronger trend upward. Hopefully (at least for the sake of the construction industry), Congress will throw some much needed funds in the direction of infrastructure improvements.