Construction Spending: Revisions Dampen Previous Gains

Bottom Line: Construction rose moderately in November, while October's sharp gains were revised lower. Still, growth in the 3-months ended in November was quite strong, led by residential and public construction spending amid hurricane-related rebuilding. On a longer-term trend basis, though, the 12-month average growth rate (with all but a month of 2017 reported now) is sharply below that of both 2016 and 2015, suggesting GDP gains from construction in the 4th Quarter will likely prove transitory. Construction Spending ROSE by 0.8% in November, compared with market expectations for an increase of 0.5%. The October estimate was revised modestly lower from 1.50% to 0.87%, while the September estimate was revised modestly higher from 0.3% to 1.3%. Construction spending is now 2.4% ABOVE its year ago level and back to its March 2006 peak. Residential Construction ROSE by 1.0%, Homebuilding is now 7.9% ABOVE its year ago level. Nonresidential Construction ROSE by 0.9%. Nonresidential construction growth is now 3.1% BELOW its year ago level. Public Construction ROSE by 0.2%, and is now 1.8% ABOVE its year ago level.