Construction Spending Source: Department of Commerce Frequency: Monthly Availability: Two months following the reported month Possible Impact on Interest Rates: Of little consequence to the bond market.
Current Data Reported May 2, 2000: Construction spending was reported up 1.4% in March. All components posted gains for the sixth straight month. Despite higher interest rates, construction is going strong and showing no signs of slowing in the near future. See "Overview" below for more information. Overview: Construction spending represents about 20% of the gross domestic product, making it a very important source of information. Economists look to construction spending for clues about the overall economy. The construction industry is one of the first to go into a recession when the economy declines and, likewise, the first to recover as conditions improve. The data covers three important areas: private construction (residential and nonresidential) and public construction. The residential category includes single family homes and apartments. Nonresidential construction includes factories, offices, hotels, motels, churches, hospitals, and private schools. Finally, the public sector covers highways, streets, military reservations, water supply facilities, public school buildings, housing projects, and sewer systems. The construction spending data has two problems--it is late in coming and not particularly accurate when it arrives. It is published two months out from the reported month, making it one of the last pieces of information reported on the state of the economy. Because of its volatility, economists typically use the three- to six-month moving average in order to determine trends. The bond market considers this report useless. Consequently, it has little impact on bond prices.
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