Tuesday, November 01, 2016

Construction Spending declined in September

by Bill McBride on 11/01/2016 11:30:00 AM

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

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during September 2016 was estimated at a seasonally adjusted annual rate of $1,150.0 billion, 0.4 percent below the revised August estimate of $1,154.4 billion. The September figure is 0.2 percent below the September 2015 estimate of $1,152.1 billion.

During the first 9 months of this year, construction spending amounted to $863.2 billion, 4.4 percent above the $826.8 billion for the same period in 2015.
Both private spending and public spending decreased in September:
Spending on private construction was at a seasonally adjusted annual rate of $879.7 billion, 0.2 percent below the revised August estimate of $881.6 billion. ...

In September, the estimated seasonally adjusted annual rate of public construction spending was $270.3 billion, 0.9 percent below the revised August estimate of $272.8 billion.
emphasis added
August was revised up to -0.5% from -0.7%, and July revised up sharply to 0.5% from -0.3%.

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 now 3% 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 8% year-over-year.

Looking forward, all categories of construction spending should increase in the coming year. 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 0.6% increase for September.