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Economy in Brief

U.S. Construction Spending Activity Deteriorates
by Peter D'Antonio  August 1, 2017

The value of construction put-in-place posted a surprisingly soft reading of -1.3% in June (+1.6% y/y), versus expectations (according to the Action Economics Forecast Survey) of a 0.4% increase. Revisions were mixed, with a slightly higher May report partially offsetting a sharply lower April figure. The net effect was a downward adjustment of 0.7 percentage points to past months.

Since peaking late last year at nearly a 10% y/y gain, construction spending has moderated sharply. The weakness has been particularly acute in the past three months, as total construction spending has fallen by 2.8% in that time.

While residential spending continues to post solid 9.0% y/y gains, the last three months have been down, reflecting sharply lower improvements and multi-family structures. These categories tend to be very volatile.

Public construction spending has been weak as well. Public nonresidential spending declined 8.1% in the past three months and 9.5% in the past year. In June, every major category of public nonresidential spending declined. The biggest contributors to the June drop were education (-5.5%) and roads (-6.6%).

The construction spending figures are in Haver's USECON database and the expectations reading is contained in the AS1REPNA database.

Construction Put in Place (SA, %) Jun Apr Mar Jun Y/Y 2016 2015 2014
Total -1.3 0.3 -1.8 1.6 6.7 10.5 11.4
  Private -0.1 -0.1 -0.9 5.3 9.2 12.5 15.4
    Residential -0.2 -0.8 -0.4 9.2 10.6 13.8 14.6
    Nonresidential 0.1 0.6 -1.4 1.1 7.6 11.2 16.3
  Public -5.4 1.9 -4.7 -9.5 -0.4 5.0 1.9
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