Highlights
Construction spending in December continued to plummet across all major sectors. Construction outlays fell 1.4 percent in December, after posting a 1.2 percent drop in November. The markets had expected a 1.2 percent decline for the latest month. Weakness in December was led by a sharp 3.2 percent plunge in private residential outlays. The other two major components also fell with private nonresidential decreasing 0.4 percent while public outlays declined 0.8 percent.

On a year-on-year basis, overall construction outlays were down 3.6 percent in December, compared to down 4.2 percent in November.

We used to worry only about housing but now the entire construction sector is in recession. Mortgage markets are in disarray and consumer worries over jobs are keeping housing down. Businesses are cutting back on new projects and state & local government budget shortfalls are weighing on public construction. It looks like the numbers are going to be negative for a while.

But for today, the December number was close to expectations and should have little impact on markets. Meanwhile, the ISM report was negative but not as bad as expected.

Market Consensus before announcement
Construction spending declined 0.6 percent in November, after dropping 0.4 percent in October. Weakness in the latest month was led by a sharp 4.2 percent decrease in private residential outlays. But the other two major components actually rose. Private nonresidential spending rose 0.7 percent while public outlays increased 1.4 percent in November. On a year-on-year basis, overall construction outlays were down 3.3 percent in November.

Construction spending Consensus Forecast for December 08: -1.2 percent
Range: -5.0 to +2.0 percent

2009 Release Schedule

Released On: 1/5 2/2 3/2 4/1 5/4 6/1 7/1 8/3 9/1 10/1 11/2 12/1 Release For: Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct