Construction Spending Isn't Dead. Yet.

The Census Bureau recently released numbers detailing the dismal state of construction spending nationwide. While these numbers are pretty boring and generally overlooked, they're a good harbinger of things to come in the economy -- especially as real estate in all shapes and sizes continues to dominate the demise of banks. Let's have a look:

Sector	Sept. 2008	Aug. 2008	July 2008	Sept. 2007
Residential	$344,447	$348,835	$342,490	$472,384
Non-Residential	$715,633	$714,688	$717,521	$662,477
Total	$1,060,079	$1,063,523	$1,060,011	$1,134,860

All numbers annualized and seasonally adjusted, in millions.

Yawn ... things are fairly unchanged since August, which is probably a good thing. In these chaotic markets, no news is usually good news.

September's residential construction numbers are a good 27% below where they were last year, but that's to be expected. After a year of homebuilders like Beazer Homes (NYSE: BZH) and Lennar (NYSE: LEN) being decimated by a rotten market and a cliff-dive in housing demand, a 27% drop in new construction spending isn't too surprising. You want a jaw-dropping number? The annualized $344 billion is almost half the amount spent when the market was on fire in 2006. Behold the power of bubbles.  

Now the good news
On the non-residential front, things aren't quite as pitiful. In fact, some sectors are downright flourishing. Check out the one-year growth in these non-residential construction sectors:

Sector	1-Year Growth
Manufacturing	54%
Lodging	26.1%
Power	25.9%
Public Safety	21.2%
Water Supply	13%
Office	12.1%

The surge in manufacturing construction spending was likely fueled by a weak dollar, making the few things we manage to manufacture here at home relatively cheap to foreign nations, thus increasing demand. This also gives multinationals like Coca-Cola (NYSE: KO) and Boeing (NYSE: BA) a silver lining in an otherwise dreadful economy.

What's next?
Remember, these recent numbers reflect activity through September ... before the massive financial crash and credit freeze we experienced in October. It'll be interesting to see the progress of next month's numbers, when the real effect of banks' October woes may begin to trickle down and threaten existing projects, throwing yet another wrench into an already oppressed market.  

For related Foolishness:

• How Much Longer Will Housing Be Hammered?
• A Risk That No Longer Exists
• It's So Much Worse Than You Think