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Construction Spending: Slight Decline at End of Strong Quarter

February 1, 2017

Bottom Line: Public construction fell in December while private residential construction continued to grow, climbing at a 15% annualized rate in the 4th Quarter. Meanwhile, non-residential declined at a 2.4% annualized rate in the 4th Quarter, led by declines in construction related to the manufacturing and power sectors. Finally, public construction fell and is now modestly below its year ago level despite modest growth in the 4th Quarter. Overall, construction spending is now modestly above its year ago levels, growing at a pace of 4.2% in 2016, sharply lower than its 8+% annual pace in the prior two years.

Construction Spending FELL by 0.2% in December, compared with market expectations for an increase of 0.5%. The November estimate was nearly unchanged, while the October, estimate was revised modestly higher from 0.6% to 0.8%. Construction spending is now 4.2% ABOVE its year ago level but still 2.0% below its March 2006 peak.

Residential Construction ROSE by 0.5%, Homebuilding is now 3.7% ABOVE its year ago level.

Nonresidential Construction was UNCHANGED. Nonresidential construction growth is now 9.2% ABOVE its year ago level.

Public Construction FELL by 1.7%, and is now 1.8% BELOW its year ago level.

Article by Contingent Macro Advisors