Construction Spending: Potential Bottoming For This Weak Sector?

Bottom Line: Construction rose more than expected in December, but there were once again negative revisions to previous months. The 3-month average annual rate of change fell from 12+% to 5.5% with October's gains, especially in private construction, revised sharply lower as the government corrected its tallies made after the hurricanes. Still, with an increase in public construction in 2nd half of 2017, there are signs that overall construction, a source of deceleration for the overall economy in the last two years, might be finding a bottom. Construction Spending ROSE by 0.7% in December, compared with market expectations for an increase of 0.4%. The November estimate was revised modestly lower from 0.80% to 0.60%, while the October estimate was revised modestly lower from 0.9% to 0.1%. Construction spending is now 2.6% ABOVE its year ago level and back to its March 2006 peak.

• Residential Construction ROSE by 0.5%, Homebuilding is now 6.2% ABOVE its year ago level.
• Nonresidential Construction ROSE by 1.1%. Nonresidential construction growth is now 2.5% BELOW its year ago level.
• Public Construction ROSE by 0.3%, and is now 4.4% ABOVE its year ago level.