- by New Deal democrat
Let’s take a look now at construction spending for April. To cut to the chase, in all respects there was a continued decline.
In nominal terms, total construction spending declined -0.4%, while the more leading residential construction spending declined -0.9%, the third straight month for declines in both measures:
Total nominal construction spending is down -1.9% since January, while residential spending is down -3.9%. But as the below graph shows, over the past 25 years there have been other, steeper declines without a recession occurring. In 2007, the respective declines were -8.5% and -28.1% before the Great Recession actually started (graph is in log scale better to show the magnitude of declines):
Because the cost of construction materials rose 0.7% in April, real total construction spending declined -1.1% for the month, while real residential construction spending declined -1.6%. Again, as you can see in the below graph also set to log scale, there have been several steeper declines in the past 10 years without a recession occurring:
Of note, both total and manufacturing industrial production are down slightly from their last peaks in January and February, respectively:
Putting this report together with this morning’s other report on manufacturing from ISM, it appears the goods-producing part of the economy as a whole is very slightly contracting. It will be interesting to see if this is reflected in a decline in goods-producing jobs in Friday’s report. But as I indicated in my earlier note this morning, the US economy is so heavily weighted towards services that I would need to see those turn down as well, at least slightly, to warrant a recession watch.