Econoday Report: Construction Spending 1, 2006

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Construction Spending

Definition
The dollar value of new construction activity on residential, non-residential, and public projects. Data are available in nominal and real (inflation-adjusted) dollars. Why Investors Care

Released on 3/1/06 For Jan 2006

Construction Spending, M/M change
Actual	0.2%
Consensus	1.5%
Consensus Range	0.7% to 2.5%
Previous	0.7 %

Highlights
Construction expenditures inched up only 0.2 percent in January, significantly less than expected given the unseasonably warm weather that boosted housing starts during the month. The construction report showed significantly less activity with only a 0.1 percent rise in residential construction and a 0.5 percent rise in nonresidential construction spending during the month. Public construction increased 0.2 percent.

In the residential sector, construction of single family homes inched up 0.1 percent while construction of multi-family homes fell 0.5 percent. Among the nonresidential sector, office building construction fell 0.2 percent, manufacturing plant construction fell 1.4 percent and power plant construction declined 0.6 percent. A few components posted gains: commercial building construction rose 0.4 percent and transportation-related construction increased 1.2 percent.

The smaller-than-expected rise in construction spending, which doesn't seem to fit the seasonal pattern for this month, might have been viewed in a negative light by the equity markets, but February's ISM manufacturing index, reported at the same time, was stronger than expected. And market players are more keyed in to that report.

Market Consensus Before Announcement
Construction spending increased 1 percent in December after rising 0.5 percent in November. January construction gains are likely to be oversized based on all the other January housing figures.

Construction spending Consensus Forecast for Jan 06: 1.5 percent
Range: 0.7 to 2.5 percent

Trends

Construction spending has moderated significantly over the past year despite strenth in the housing market. Residential construction is not growing as rapidly as it did even though current levels are high. Nonresidential construction has begun to improve, but gains are still modest.

Data Source: Haver Analytics

2006 Release Schedule

Released On: 1/3 2/1 3/1 4/3 5/1 6/1 7/3 8/1 9/1 10/2 11/1 12/1

Released For: Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct