U.S. Construction Spending Increased 0.5% in August
In August, construction spending increased 0.5% to a seasonally adjusted annual rate of $1,218.3 billion per the most recent report from the U.S. Census Bureau. This is welcome news after watching construction spending drop the previous two months. July’s estimate was revised up from $1,211.5 billion to $1,212.3 billion and June’s estimate was revised up again from $1,219.2 billion to $1,226.4 billion. Construction spending for August 2017 is up 2.5% from a year ago. The seasonally adjusted annual rate of construction spending in August 2016 was $1,189.1 billion.
Construction spending from January through August totaled $806.2 billion. This is 4.7% higher than the $769.9 billion spent through the first eight months of 2016.
Total nonresidential construction was at a seasonally adjusted annual rate of $691.8 billion in August, which is 0.5% above July’s estimate of $688.1 but 3.4% below where it was a year ago.
In August, total residential construction was at an estimated seasonally adjusted annual rate of $526.5 billion, a 0.85% increase from July’s revised estimate of $524.2 billion and 11.3% higher year over year.
Total private construction spending in August increased 0.4% to a seasonally adjusted annual rate of $954.8 billion. July’s estimate was revised up from $945.5 billion initially to $950.5 billion and June’s estimate was revised up again from $949.4 billion to $955.7 billion. Total private construction spending 4.7% above August 2016’s estimate of $ 911.5 billion.
Private nonresidential construction spending was at a seasonally adjusted annual rate of $433.9 billion for August. This is 0.5% higher than July’s estimate which has been revised up from $428.0 billion to $432.0 billion. June’s estimate for private nonresidential construction has been revised back up from $436.2 billion to $438.0 billion.
Private residential construction was up 0.4% for the month and 11.6% higher than a year ago. August’s estimate for private residential spending was $520.9 billion. July’s estimate was revised up from $517.5 billion initially to $518.6 billion and June’s estimate was revised up again from $513.2 billion to $517.7 billion.
The seasonally adjusted annual rate of public construction spending was estimated at $263.5 billion in August. This is 0.7% higher than July’s estimate which has been revised down from $266.0 billion to $261.7 billion. June’s estimate which was revised up again from $270.0 billion to $270.7 billion. Public construction spending is 5.1% lower than it was a year ago. The August 2016 estimate for public construction was $277.5 billion.
ConstructConnect's Chief Economist Alex Carrick shared his take on the last spending numbers:
"August’s month-to-month changes in the Census Bureau’s seasonally adjusted (SA) put-in-place numbers for residential, non-residential and total were each the same, +0.5%.
"For January-to-August 2017 versus January-to-August 2016, however, residential construction with an increase of +11.7% clearly outshone nonresidential activity, which was flat at -0.1%.
"Total construction through the first two-thirds of this year has been +4.5% versus the same period of last year. In August 2016, the comparable figure for total construction was +6.0%.
"Nonresidential put-in-place construction activity is currently struggling to make headway. Furthermore, some of the major subcategories of work which are still performing well on a year-to-date basis, have been decelerating over the past three months.
"For example, ‘lodging’ work is +11.4% ytd, but is -1.0% in the latest three months versus prior three months, annualized.
"There are similar slowdown patterns for: ‘office,’ +15.5% moderating to +2.1%; ‘commercial/retail,’ +16.8% pulling back to +0.5%; and ‘educational,’ +3.0% inverting to -18.9%.
"Two other major categories that were already negative ytd have deteriorated further in the past three months: ‘highway and street,’ reversing further from -2.2% to -28.2%; and ‘manufacturing,’ contracting some more from -10.4% to -35.6%.
"The only good news stories have occurred in ‘health care,’ where a +1.2% ytd performance has improved a bit to +2.9% more recently, and ‘communication,’ going from +3.6% to an expansive +19.0%.
"In terms of stock market investor confidence and labor market jobs creation, the economy is roaring ahead. But it’s business owners who must decide whether or not to ‘greenlight’ capital spending and many of them are still sitting on their hands."