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Construction Spending declined in August

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Earlier today, the Census Bureau reported that overall construction spending declined in August:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during August 2016 was estimated at a seasonally adjusted annual rate of ,142.2 billion, 0.7 percent below the revised July estimate of ,150.6 billion. The August figure is 0.3 percent below the August 2015 estimate of ,145.2 billion.

Private spending and public spending decreased in August:

Spending on private construction was at a seasonally adjusted annual rate of 1.6 billion, 0.3 percent below the revised July estimate of 4.6 billion. …

In August, the estimated seasonally adjusted annual rate of public construction spending was 0.5 billion, 2.0 percent below the revised July estimate of 6.0 billion.
emphasis added

Construction Spending Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Residential and public spending have slumped a little recently.

Private residential spending has been generally increasing, but is 34% below the bubble peak.

Non-residential spending is now 2.0% above the previous peak in January 2008 (nominal dollars).

Public construction spending is now 17% below the peak in March 2009, and only 3% above the austerity low in February 2014.

Year-over-year Construction SpendingThe second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is up 1%. Non-residential spending is up 4% year-over-year. Public spending is down 9% year-over-year.

Looking forward, all categories of construction spending should increase in 2016. Residential spending is still fairly low, non-residential is increasing – although there has been a recent decline in public spending.

This was well below the consensus forecast of a 0.3% increase for August.
Calculated Risk

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