Monday, October 03, 2016

Construction Spending declined in August

by Bill McBride on 10/03/2016 01:01:00 PM

Earlier today, the Census Bureau reported that overall construction spending declined in August:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during August 2016 was estimated at a seasonally adjusted annual rate of $1,142.2 billion, 0.7 percent below the revised July estimate of $1,150.6 billion. The August figure is 0.3 percent below the August 2015 estimate of $1,145.2 billion.
Private spending and public spending decreased in August:
Spending on private construction was at a seasonally adjusted annual rate of $871.6 billion, 0.3 percent below the revised July estimate of $874.6 billion. ...

In August, the estimated seasonally adjusted annual rate of public construction spending was $270.5 billion, 2.0 percent below the revised July estimate of $276.0 billion.
emphasis added
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 2.0% above the previous peak in January 2008 (nominal dollars).

Public construction spending is now 17% below the peak in March 2009, and only 3% above the austerity low in February 2014.

Year-over-year 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 1%. Non-residential spending is up 4% year-over-year. Public spending is down 9% year-over-year.

Looking forward, all categories of construction spending should increase in 2016. Residential spending is still fairly low, non-residential is increasing - although there has been a recent decline in public spending.

This was well below the consensus forecast of a 0.3% increase for August.