Monday, August 01, 2016

Construction Spending decreased 0.6% in June

by Bill McBride on 8/01/2016 11:59:00 AM

Earlier today, the Census Bureau reported that overall construction spending decreased 0.6% in June compared to May:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during June 2016 was estimated at a seasonally adjusted annual rate of $1,133.5 billion, 0.6 percent below the revised May estimate of $1,140.9 billion. The June figure is 0.3 percent above the June 2015 estimate of $1,130.5 billion.
Private and public spending decreased in June:
Spending on private construction was at a seasonally adjusted annual rate of $851.0 billion, 0.6 percent below the revised May estimate of $856.6 billion. ...

In June, the estimated seasonally adjusted annual rate of public construction spending was $282.5 billion, 0.6 percent below the revised May estimate of $284.3 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.

All three categories have slumped recently.

Private residential spending has been generally increasing, but is 34% 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 3%. Non-residential spending is up 2% year-over-year. Public spending is down 6% 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 June, and construction spending for the previous two months were revised down.