Construction Spending Declines 2.5% in December

Posted by Rumin Mann
February 10th, 2011

Total construction spending fell 2.5% in December and October and November spending was revised sharply lower. This erases the previously reported small three month gain in construction spending and drops current spending to slightly below last August. The construction recovery is still expected early in 2011 but has been delayed slightly.

Three factors caused the yearend decline in construction activity. Over half of the decline was due to a huge downward revision in residential construction spending. This is implausible. Similar sharp drops in the last few years have often been revised away. Other market data suggest that remodeling work is at least steady and may be rising slowly. The huge drop will be revised away or offset by a huge gain in the next few months and hence will little impact on the 2011 level of remodeling spending.

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