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Economy in Brief

U.S. Construction Spending Weaker Than Expected; Q2 Remains Strong
by Gerald D. Cohen  July 2, 2018

The value of construction put-in-place increased 0.4% month-on-month in May (4.5% year-on-year), slightly less than the 0.5% expected by the Action Economics Forecast Survey. April's gain was cut in half to 0.9% m/m and March's drop was revised to a smaller decline. On net the level of construction spending in April was lower than originally reported. Despite these weaker readings, second quarter construction spending is 1.2% (4.8% annualized) above the first quarter level.

Private sector building activity, which is over three times the size of public sector spending, increased 0.3% m/m (4.4% y/y). Residential construction spending grew 0.8% (6.6% y/y) while non-residential declined 0.3% (+1.8% y/y). As with total construction, the revisions to March and April left spending in all of these categories at a lower level in April than originally reported. In the residential sector, single family construction increased 0.6% in May, the volatile multi-family sector rose 1.6% and home improvements were up 0.9%.

The value of public sector building activity grew 0.7% (4.7% y/y) in May after an upwardly revised 2.3% jump in April (was -1.3%). March's increase was revised slightly lower to 1.0% m/m. The largest component of public construction, highway and street edged down 0.2%, while the second largest, education rose 0.9%.

The construction spending figures, some of which date back to 1946, are in Haver's USECON database. The expectations reading can be found in the AS1REPNA database.

Construction Put in Place (SA, %) May Apr Mar May Y/Y 2017 2016 2015
Total 0.4 0.9 -0.9 4.5 4.1 6.5 10.7
  Private 0.3 0.4 -1.5 4.4 6.2 9.2 12.9
    Residential 0.8 0.5 -2.4 6.6 10.9 10.5 14.2
    Nonresidential -0.3 0.4 -0.4 1.8 1.1 7.7 11.5
  Public 0.7 2.3 1.0 4.7 -2.5 -1.2 5.1
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