- by New Deal democrat
Last month I wrote that both the manufacturing and housing sectors were “on fire.” If anything, this month they turned white hot, with both construction spending and ISM manufacturing data at levels not seen in years.
Turning to construction, in January spending for residential construction surged even further, up 2.5% for the month. This was the highest nominal reading ever:
Taking into account inflation - deflating by the PPI for construction materials, which rose 2.7% for the month, in the graph below - residential construction spending (blue) declined -0.2%. Because permits have to be taken out before construction can begin, typically these lead construction spending (although in fairness that really hasn’t been true in the past 2 years). Below I show the less volatile single family permits (right scale):