Spending revisions: industry growth stronger
By Daryl Delano -- Industrial Distribution, 10/1/1998
Along with death and taxes, add to life's inescapable certainties the unfortunate phenomena of data revisions to government statistical series. It's that time of the year again for the Commerce Department's construction spending series that we follow closely.The government revises the Mother of All Government Statistics-the Gross Domestic Product - seemingly every time you turn around. For a given calendar quarter, we get an "advance" GDP report, a "preliminary" GDP report, and a "final" report on the total value of all goods and services produced in the U.S.
By the standards of the GDP experience, the once-a-year revision schedule for construction spending estimates isn't too hard to take. Nevertheless, there are some years when the revisions are so extensive that they can dramatically alter our analysis of where the various construction sectors are headed. It's hard to forecast with any degree of confidence if you don't have a good fix on the point from which you're starting.
Fortunately, we got off fairly easy this year; the revisions are noteworthy in many respects, but they don't fundamentally change our past analysis of the significant trends impacting the various markets. Consequently, the forecasts that we presented in some detail in our last Construction Update are fundamentally sound.
Here are the highlights of the revisions as they impacted the 1997 spending estimates by sector (prior year's data were also affected, but to a lesser extent):
* Total construction spending during 1997 is now estimated to have reached $539.7 billion. This is about 2.5% greater, or approximately $13.2 billion more, than previously measured. Not an insignificant change, to be sure, but not overly large when viewed in historical context. Last year's increase in total industry spending is now pegged at 6.5%, not the 5.1% rise in total construction activity from the 1996 total previously published.
* Residential sector construction spending revisions accounted for only $1.6-billion worth of the $13.2-billion increase in the 1997 total estimate. At $187.1 billion, dollars spent on new single- and multi-family housing during 1997 represented a gain of 4.3% from 1996. This was an upward revision of less than 1% from the original "final" 1997 number.
* Construction of nonresidential (commercial, industrial, and institutional) buildings is now estimated to have reached $228.7 billion last year, $7 billion more than previously identified. This was a gain of 9.4% from the 1996 total; the original growth estimate for the nonresidential sector was an already-strong 7.6%. The new 1997 total represents an upward revision of 3.2% from the total previously reported.
* The revisions to the nonbuilding sector were the most significant, from the perspective of original vs. revised numbers percentage change. At $123.9 billion, the new 1997 estimate of total nonbuilding construction work put-in-place last year is 3.7% higher than the total previously reported. The new total yields a 1997 growth rate of 4.8% instead of the 3.5% original estimate.
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