Construction Spending: Headline Better But Trend Weak

November 1, 2017
Bottom Line: Construction spending rose in September compared with expectations for a decline. But there were net negative revisions to the prior two months. On a trend basis the 12-month rate of change continued to decline. While still the strongest segment, residential construction has started to decline, falling 1.8% annualized over the last three months. The private nonresidential construction segment has seen the biggest declines over the last 3-, 6- and 12-months, led by weakness in manufacturing related construction, as well as office construction. Overall the trend in construction continues to decelerate and verge on declines. Construction Spending ROSE by 0.3% in September, compared with market expectations for a decrease of -0.2%. The August estimate was revised modestly lower from 0.5% to 0.1%, while the July, estimate was revised modestly higher from -1.2% to -0.9%. Construction spending is now 2.0% ABOVE its year ago level but still 1.6% below its March 2006 peak. Residential Construction was UNCHANGED, Homebuilding is now 9.6% ABOVE its year ago level. Nonresidential Construction FELL by 0.8%. Nonresidential construction growth is now 3.8% BELOW its year ago level. Public Construction ROSE by 2.6%, and is now 1.6% BELOW its year ago level.