ECONOMIC NUGGETS – December 5, 2013

1. Many government agencies that collect, process, and release data are still in the process of catching up following the federal government shutdown. By January, most data releases will be back to a normal schedule
2. The Census Bureau released September and October construction spending numbers showing a slight dip in September and improvement in October
3. October total commercial construction spending was $908.4 billion at a seasonally adjusted annualized rate (SAAR), which was up 0.8% from September and up 5.0% year-to-date not seasonally adjusted (NSA) compared to the same period in 2012. July and August spending numbers were revised down—$6.6 billion and $11.3 billion, respectively—down 0.7% and down 1.2% from their previously reported levels. The change was due to a large downward revision in residential improvements spending
• Nonresidential building construction spending was $305.1 billion, a solid 3.7% rebound from September’s 2.4% drop, but still down 1.4% year-to-date from 2012. July spending, was revised up $4.0 billion, +1.4% of its previously reported level, and August spending was revised up $4.6 billion, +1.5% of its previously reported level
• Lodging construction spending advanced for the fourth month in a row, up 1.2% in October, after rising 0.7% in September. On a year-to-date basis, spending was up 22.4% over last year
• Office construction spending rebounded 2.7% in October from September’s 1.8% decline; year-to-date spending was down 2.1%
• Commercial (mainly retail) construction spending increased a strong 2.8% in October after increasing 1.7% in September; year-to-date spending was up 3.7%
• Construction spending for each of the institutional categories was up in October. The largest category of the group, education construction spending, also had the biggest advance, surging 8.1% in October. However, on a year-to-date basis, all of the categories were down compared to 2012
• Manufacturing construction spending partially recovered, up 1.3%, from September’s 4.7% tumble and was up 3.9% on a year-to-date basis
• Heavy engineering (non-building) construction spending was $270.5 billion,which was down 0.7% from September and down 0.5% year-to-date from 2012. The July and August spending numbers were revised up $1.1 billion and $1.0 billion, respectively—both up 0.4% from the previously reported numbers
• New residential construction spending was flat at $210.3 billion, up 30.6% year-to-date from 2012.  Total residential construction spending, which includes residential improvements, was $332.9 billion—down 0.5% from September. Of more concern, the July and August residential improvements spending numbers were revised down $11.6 billion and $16.9 billion, respectively, down 8.5% and down 12.4% from their previously reported numbers. These revisions were large enough to affect total construction revisions. The accuracy is also in question based on other survey results
4. The October AIA Architecture Billings Index (ABI) fell sharply from September, down 2.7 points to 51.6. Even with the fall, the ABI remains above 50, marking the 14th month in the last 15 months the index has been above 50. A reading above 50 indicates increased billings, a positive for future commercial construction
5. The November NAHB/Wells Fargo Housing Market Index (HMI) was unchanged from October at 54. For the sixth month in a row, the index was above 50―a positive for single-family residential construction
6. October new home sales rocketed 25.4% higher to 444,000 (SAAR) after plunging 6.6% in September. The accuracy of the September and October numbers is suspect given the disruption to data collection by the Census Bureau due to the federal government shutdown in October. Whether averaging sales for the two most recent months or averaging them over a longer period, it appears that new home sales are around 400,000—a respectable level based on recent activity, but hardly spectacular
7. Housing prices continue on their upward trajectory. Both 10-city and 20-city S&P/Case-Shiller® Home Price seasonally adjusted (SA) indexes have increased for 20 straight months. In September, they were up 0.9% and 1.0%, respectively. On a year-over-year NSA basis, they were both up 13.3%
8. For all 20 cities, home prices on a year-over-year NSA basis have increased for nine months in a row. On a monthly SA basis, prices were up in all 20 cities
9. The SA Federal Housing Finance Agency’s (FHFA) Purchase-Only Home Price Index increased 0.3% in September, its 20th consecutive monthly increase. On a year-over-year NSA basis, the index was 8.5% higher
10. Third quarter 2013 real (inflation adjusted) gross domestic product (GDP) growth rate was revised up from 2.8% (SAAR) to 3.6%―a rate that, if sustained, would mean faster employment growth. Not all of the revisions, however, indicate continued strength. In particular, inventory accumulation, already high, accounted for slightly more than the increase in growth―increasing real GDP by 0.85%. This increase indicates a likelihood that companies will reduce orders and production in the fourth quarter, as they strive to bring inventories back in balance with sales
11. Exports were lower and imports were higher than originally estimated. As a result, real net exports shaved 0.24% off their contribution to the revised GDP growth rate
12. Earlier upward revisions to construction spending resulted in better growth in nonresidential structures, increasing their contribution to real GDP growth by 0.04%. Given the upward revisions in nonresidential construction spending this month, a further increased contribution from this area can be expected when updated third quarter real GDP numbers are released later this month
13. The contribution to third quarter real GDP growth from residential construction was reduced by 0.05%. Given the sharp downward revisions in residential improvements, expect a further downward revision in residential construction’s contribution to real GDP growth in the next release. As previously noted, the accuracy of those revisions should be questioned
14. The SA Producer Price Index (PPI) for finished goods fell 0.2% in October after declining 0.1% in September. On a year-over-year NSA basis, the October PPI was up 0.3%
15. A price index for inputs used in nonresidential construction, excluding capital equipment, fell 0.5% (NSA) in October following no change in September. While the index was unchanged (NSA) from October 2012, the PPI for inputs for residential construction was up 1.2% over the same period
16. The Consumer Price Index (CPI) decreased 0.1% (SA) in October after increasing 0.2% in September. The CPI was 1.0% (NSA) higher than in October 2012. Core CPI, which excludes food and energy prices, rose 0.1% (SA) for the third month in a row. On a year-over-year basis, the index was up 1.7% (NSA) from October 2012
17. via:http://www.reedconstructiondata.com/market-intelligence/bernie-markstein/economic-nuggets-8211-december-4-2013/