Tuesday, September 01, 2020

Construction Spending Increased Slightly in July

by Calculated Risk on 9/01/2020 10:20:00 AM

From the Census Bureau reported that overall construction spending decreased in June:

Construction spending during July 2020 was estimated at a seasonally adjusted annual rate of $1,364.6 billion, 0.1 percent above the revised June estimate of $1,362.8 billion. The July figure is 0.1 percent below the July 2019 estimate of $1,366.0 billion.
emphasis added
Private spending increased and public spending decreased:
Spending on private construction was at a seasonally adjusted annual rate of $1,013.5 billion, 0.6 percent above the revised June estimate of $1,007.2 billion. ...

In July, the estimated seasonally adjusted annual rate of public construction spending was $351.1 billion, 1.3 percent below the revised June estimate of $355.6 billion.
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 spending is 19% below the previous peak.

Non-residential spending is 12% above the previous peak in January 2008 (nominal dollars).

Public construction spending is 8% above the previous peak in March 2009, and 34% 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 mostly unchanged. Non-residential spending is down 4.3% year-over-year. Public spending is up  5.1% year-over-year.

This was below consensus expectations of a 1.0% increase in spending, however construction spending for the previous two months was revised up slightly.

Construction was considered an essential service in most areas and did not decline sharply like many other sectors, but it seems likely that non-residential and public spending will be under pressure.