Friday, July 01, 2016

Construction Spending decreased 0.8% in May

by Bill McBride on 7/01/2016 12:11:00 PM

Earlier today, the Census Bureau reported that overall construction spending decreased 0.8% in May compared to April:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during May 2016 was estimated at a seasonally adjusted annual rate of $1,143.3 billion, 0.8 percent below the revised April estimate of $1,152.4 billion. The May figure is 2.8 percent above the May 2015 estimate of $1,112.2 billion.
Private and public spending decreased in May:
Spending on private construction was at a seasonally adjusted annual rate of $859.3 billion, 0.3 percent below the revised April estimate of $861.9 billion. ...

In May, the estimated seasonally adjusted annual rate of public construction spending was $284.0 billion, 2.3 percent below the revised April estimate of $290.5 billion.
emphasis added
Private Construction Spending Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Private residential spending has been generally increasing, but is 33% below the bubble peak.

Non-residential spending is only 2% below the peak in January 2008 (nominal dollars).

Public construction spending is now 13% below the peak in March 2009.

Private Construction SpendingThe second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is up 5%. Non-residential spending is up 4% year-over-year. Public spending is down 3% year-over-year.

Looking forward, all categories of construction spending should increase in 2016. Residential spending is still fairly low, non-residential is increasing (except oil and gas), and public spending is also generally increasing after several years of austerity.

This was well below the consensus forecast of a 0.6% increase for May, however construction spending for the previous two years were revised up.