Economy Watch: Construction Spending Ekes Out Gain; GSE Delinquencies Slipping; Car Sales Spike
- Jun 04, 2013
The Census Bureau reported that U.S. construction spending edged up in April by 0.4 percent compared with March, to an annualized rate of $860.8 billion. Compared with the same month a year earlier, the increase in construction spending was more pronounced, up 4.3 percent. During the first four months of 2013, construction spending was up 4.5 percent compared with the same period in 2012.
Private construction projects are responsible for the entire monthly increase in overall construction spending. Spending on private projects was up 1 percent month over month, with residential projects barely registering—multi-family construction swung downward that month–while nonresidential project spending was up by 2.2 percent in April compared with March.
Public construction is shrinking, down 1.2 percent in April compared with the previous month, even though spending on education projects was up 4.4 percent and highway construction gained 0.5 percent. These increases weren’t enough to make up for declining federal monies for public construction, which shrank because of the sequester. Public construction spending is now down about 20 percent compared with its peak in stimulus-era March 2009, and at its lowest level since 2006.
GSE Delinquencies Slipping
Fannie Mae reported on Monday that the rate of serious delinquencies among single-family property mortgages that it owns or controls dropped from 3.02 percent in March to 2.93 percent in April. The rate was 3.63 percent in April 2012, and is now at its lowest level since January 2009, when it was headed upward fast. The most recent peak in Fannie delinquency was 5.59 percent in February 2010.
Freddie Mac reported a similar movement in serious delinquencies: down from 3.03 percent in March to 2.91 percent in April. A year ago, Freddie Mac’s rate was 3.51 percent, and the current rate is the lowest since June 2010. The most recent delinquency peak for Freddie was 4.2 percent in February 2012.
Though the GSEs are seeing fewer serious delinquencies these days – by which they mean three or more months late in payment, or already in foreclosure – a more “normal” (pre-recession) rate is about 1 percent. At the current glacial rate of decline, it will be at least three years before the GSEs can report that that few mortgages are seriously delinquent.
Car Sales Spike
Americans are back in dealer showrooms again this spring. According an estimate released on Monday by AutoData Corp., light vehicle sales were at an annualized rate of 15.31 million in May, which is up 10 percent from May 2012, and a 3 percent gain from the sales rate in April.
On Monday, Wall Street gained back much of its Friday losses, with the Dow Jones Industrial Average up 138.46 points, or 0.92 percent. The S&P 500 gained 0.59 percent and the Nasdaq advanced 0.27 percent.