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Construction Spending: Trend weakening

July 1, 2016

Bottom Line: Construction fell in May with nonresidential and public construction declining. Homebuilding increased slightly but the year-over-year growth has slowed in recent months. Meanwhile, non-residential construction is still rising moderately year-over-year. Finally, public construction fell and is now modestly below its year ago levels. Overall, construction spending is now growing only modestly on a year-over year basis and the pace of increase has slowed recently.

Construction Spending FELL by 0.8% in May, compared with market expectations for an increase of 0.6%. The April estimate was revised moderately lower from 0.3 to -2.0, while the March estimate was revised modestly higher from 1.0 to 1.6. Construction spending is now 2.8% ABOVE its year ago level but still 5.1% below its March 2006 peak.

Residential Construction was UNCHANGED reflecting the strong gains in housing starts. Homebuilding has been on a slowly improving trend and is now 5.4% ABOVE its year ago level.

Nonresidential Construction FELL by 0.7%. Nonresidential construction year-over-year growth has been improving and is now 3.9% ABOVE its year ago level.

Public Construction FELL by 2.3%, and is now 2.6% BELOW its year ago level. Public construction had been on a declining trend until March 2014 but is now declining modestly.

Article by contingentmacro