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Construction Spending: Another Downside Miss, Trend Poor

September 1, 2017
Bottom Line: While there has been a tendency for positive revisions two months after the release of construction spending, today's sharp downside miss highlights an an anemic trend, led by declines in nonresidential, especially commercial and manufacturing, and public construction. Total construction over the last 6 months has contracted at a 2% annualized rate, compared to growth of 9.2% in 2016 and 7.3% in 2015. Spending in the residential sector continues at a moderate pace with 6.3% annualized growth in the last 6 months. But that is still well below the pace of 2016, 13.4% and 2015, 9.2%.

Construction Spending FELL by 0.6% in July, compared with market expectations for an increase of 0.5%. The June estimate was revised modestly lower from -1.3% to -1.4%, while the May, estimate was revised moderately higher from 0.3% to 1.6%. Construction spending is now 1.8% ABOVE its year ago level but still 2.3% below its March 2006 peak.

Residential Construction ROSE by 0.8%, Homebuilding is now 11.6% ABOVE its year ago level.

Nonresidential Construction FELL by 1.9%. Nonresidential construction growth is now 3.6% BELOW its year ago level.

Public Construction FELL by 1.4%, and is now 5.6% BELOW its year ago level.