Thursday, September 01, 2016

Construction Spending unchanged in July

by Bill McBride on 9/01/2016 11:59:00 AM

Earlier today, the Census Bureau reported that overall construction spending was "nearly the same" as in June:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during July 2016 was estimated at a seasonally adjusted annual rate of $1,153.2 billion, nearly the same as the revised June estimate of $1,153.5 billion. The July figure is 1.5 percent above the July 2015 estimate of $1,135.9 billion.
Private spending increased and public spending decreased in July:
Spending on private construction was at a seasonally adjusted annual rate of $875.0 billion, 1.0 percent above the revised June estimate of $866.5 billion. ...

In July, the estimated seasonally adjusted annual rate of public construction spending was $278.2 billion, 3.1 percent below the revised June estimate of $287.0 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.

Residential and public spending have slumped a little recently.

Private residential spending has been generally increasing, but is 34% below the bubble peak.

Non-residential spending is now 3.6% the peak in January 2008 (nominal dollars).

Public construction spending is now 15% 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 2%. Non-residential spending is up 7% year-over-year. Public spending is down 7% year-over-year.

Looking forward, all categories of construction spending should increase in 2016. Residential spending is still fairly low, non-residential is increasing, 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 July, however construction spending for the previous two months were revised up.