Non-Residential Construction Spending Still Strong
Submitted by
CalculatedRisk on Thu, 05/31/2007 - 6:22am (13 comments)
Shopping at Amazon?
Wait! If you click on the Amazon banner link at the top of the page first, HCN will get a percentage of anything you purchase for 24 hours!
Open predictions
Our local book authors
User login
Who's online
There are currently 13 members and 144 guests online.
Recent Recommendations
Odd of recession in 2007 is better then a coin flip.
The recession is coming soon. Be prepared. Best wishes to all.
It's almost as if the consumer no longer matters. That won't last long...
With the oil price jump this quarter, it's likely that the recession has already started...
IMO it's all in the hands of the consumer at this point. Q1 consumer spending was quite strong (4.4%) despite the miserable 0.6% GDP growth.
March consumer spending was -0.2% (it may well be revised upward). But if that sticks and we get similar numbers for April and May we might have a problem on our hands.
From looking at some past scenarios I get the impression that a consumer-led recession can often come as a surprise to business who are ramping up output and spending. So an increase in business activity doesn't preclude a recession.
I'm not convinced the consumer will stop spending, however.
Tomorrow's we get the most important economic report in my opinion.
I have no doubt that construction is staying strong, too many projects already had their financing in the pipeline. Much like the Titanic, high rise projects don't exactly stop on a dime.
I don't think that construction spending will slow until 4Q of this year.
At that point you've got the majority of ARM re-sets, slowing construction and an overbuild of inventory in manufactured goods. So expect a monster xmas rally followed by an brutal January market.
How does the consumer keep increasing real spending with energy costs skyrocketing and housing in recession?
How does the consumer keep increasing real spending with energy costs skyrocketing and housing in recession?
They didn't in March.
March consumer spending was helped by early Easter, that borrows some spending from Q2 into Q1.
Q2 consumer is weaker than Q1 consumer.
We'll get auto sales tomorrow. If they are as bad as in April...
From this report, office construction up 51.4% y.o.y., seasonally adjusted, commercial construction up 30.9% y.o.y., seasonally adjusted. These two categories make up 40% of total private construction.
The factor driving this work in most parts of the country is the dead hand of REITs that must buy and invest. I sure see a lot of empty, never occupied spaces in my travels and just try to find an office/commrcial developemnt that does not have a "for lease" sign.
Look for this little bubble to also end in tears.
From the preliminary GDP release, these are the quarterly YoY changes in Gross Private Domestic Investment (beginning in Q105 and thru Q107):
9.0 2.8 3.6 6.3 6.2 7.4 5.9 -2.1 -6.3
CR's prediction that equipment and software was doomed to follow in a lagging manner looks good (same period YoY change):
9.7 9.8 9.3 7.0 9.2 6.8 6.0 4.0 .8
These are from Table 8. The economy is fighting one huge headwind.
A look at Table 12's change in corporate profits by industry should let everyone know why domestic investment is slowing so severely. Aside from financial firms, the profits are not there, although motor vehicles made it back to 0 rather than declining growth in 2006. However, 2007's numbers look like we are declining again.
Once we exhaust this round of LBO sucker bait Alt-A leveraged buyouts, there's not much impetus left. The growth is centered in the "rest of the world" category. Now, this means that domestic employment is going to be severely impacted, although that always does lag.
Once we exhaust this round of LBO sucker bait Alt-A leveraged buyouts, there's not much impetus left. The growth is centered in the "rest of the world" category. Now, this means that domestic employment is going to be severely impacted, although that always does lag.
MOM - are you giving up on the 'small biz' folks going to save us? I remember you & I had a brief fit of optimism a few weeks back along that line... what have you seen, if anything, to change that view?
After the recent Chicago PMI release (admittedly not my favorite - I hate surveys) it still might be a possibility? A lot of the Chicago mfg activity is in small to medium sized companies - in places like Elk Grove Village.
I don't expect any change in Non-residential spendings in the near future..Because new corporates are emerging day by day and lots of expansions plans are going in the process,then i expect increase in residential spendings after 3-5 years...
Breakdown Insurance