Parting Ways

From 2019 through April 2020 residential and commercial construction followed the same path. 

Both were on a decline already in 2020 then Covid accelerated the pace. 

In June of 2020, the recoveries in residential and commercial construction parted ways. 

It's easier to spot with year-over-year comparisons.

Construction Spending Year-Over-Year

Construction Spending Year-Over-Year for 2020-11

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Note the great parting of ways ahead in 2006 of the Great Recession. It's a reverse setup now with residential leading.

Fed's Response in Play

What's happening now reflects Covid and also the Fed's response to it. 

Interest rates are the lowest in history thanks to the Fed. 

Commercial, especially malls, were already in a bad spot given trends in online shopping.

Covid amplified online shopping trends as well as the need for less office space due to increased work-at-home arrangements.

Mish

Construction Spending Details: Diving Into the Plusses and Minuses

Construction spending rose 1.4%, led by non-residential construction. Let's dive into the details.

Construction Spending Accelerates

Construction spending rose more than expected in November. Revisions add to the gains.

Construction Spending Flat, Private Construction Negative

Economists expected construction spending to rise. Instead, spending was flat, and only because of government spending.

Construction Spending Weakness: Private Spending Down 0.5%, Government Up 2.0%

A surge in gov't spending kept construction spending in the green by 0.1%. Private spending is down and trending lower.

Construction Spending Dips Slightly in July

Construction spending declined 0.1% in July. With major revisions being the norm, consider it flat.

Construction Spending Unexpectedly Weak -0.8%: Single-Family Down Every Month

Economists expected construction spending would rise 0.1%. Instead, spending fell 0.8%, including revisions, down 0.4%.

Construction Spending Unexpectedly Weak: Home Repairs Collapse

Economists expected a jump of 0.5% in construction spending. Instead, spending came in at 0.1%.

Economists Surprised by Construction Spending Slowdown: Y-O-Y Residential -3.71%

Economists are easily surprised. Today's surprise is in regard to construction spending.

Construction Spending Declines Third Consecutive Month

Construction spending fell for the third month and fourth in five months. Also, September was revised lower.