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Construction Spending increased 0.1% in June

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The Census Bureau reported that overall construction spending increased slightly in June:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during June 2015 was estimated at a seasonally adjusted annual rate of ,064.6 billion, 0.1 percent above the revised May estimate of ,063.5 billion. The June figure is 12.0 percent above the June 2014 estimate of 0.3 billion.

Private spending decreased and public spending increased:

Spending on private construction was at a seasonally adjusted annual rate of 6.4 billion, 0.5 percent below the revised May estimate of 0.0 billion …

In June, the estimated seasonally adjusted annual rate of public construction spending was 8.2 billion, 1.6 percent above the revised May estimate of 3.5 billion.
emphasis added

Note: Non-residential for offices and hotels is generally increasing, but spending for oil and gas has been declining. Early in the recovery, there was a surge in non-residential spending for oil and gas (because oil prices increased), but now, with falling prices, oil and gas is a drag on overall construction spending.

As an example, construction spending for private lodging is up 42% year-over-year, whereas spending for power (includes oil and gas) construction peaked in mid-2014 and is down 16% year-over-year.

Private 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.

Private residential spending has been increasing recently, and is 45% below the bubble peak.

Non-residential spending is only 5% below the peak in January 2008 (nominal dollars).

Public construction spending is now 8% below the peak in March 2009 and about 13% above the post-recession low.

Private 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 13%. Non-residential spending is up 15% year-over-year. Public spending is up 8% year-over-year.

Looking forward, all categories of construction spending should increase in 2015. Residential spending is still very low, non-residential is starting to pickup (except oil and gas), and public spending has also increasing after several years of austerity.

This was below the consensus forecast of a 0.6% increase, however spending for April and May was revised up significantly.  Overall, a solid report.
Calculated Risk

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