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Economy in Brief

U.S. Construction Spending Unexpectedly Weak in July
by Tom Moeller  September 4, 2018

Forward momentum in building activity continues to slow. The value of construction put-in-place improved 0.1% (5.8% y/y) during July following a 0.8% decline in June, revised from -1.1%. A 0.4% increase was expected in the Action Economics Survey.

In the private sector, the slowdown has been pronounced. Activity eased 0.1% after a 0.5% June decline. The 5.1% y/y gain compares to 7.1% growth last year, a 9.2% increase in 2016 and double-digit growth during each of the prior four years.

Residential building activity increased 0.6% (6.6% y/y) during July after declines during the prior two months. Single-family construction fell 0.3% (+6.0% y/y) after declining in three of the prior four months. Multi-family construction fell 0.4% (+1.1% y/y) after a 2.4% drop. To the upside was home improvement activity, rising 2.1% (9.4% y/y). That gain, however, followed a string of declines.

Nonresidential construction in July fell 1.0% (+3.2% y/y) after a 0.1% uptick. The value of commercial building activity was off 3.4% (+0.5% y/y) after a 0.2% increase. Health care building declined 2.2% (-1.9% y/y), down for the fifth straight month. To the upside was the value of transportation building, increasing 2.7% (21.5% y/y) after a 3.7% increase. Factory sector construction increased 0.6% (-4.4% y/y) following a 1.5% rise.

Construction activity in the public sector increased 0.7% (8.3% y/y) in July after a 1.7% decline. Power facility construction strengthened 2.8% (12.1% y/y) as it followed an 8.3% decline. Highway and street building, which accounts for about one-third of nonresidential building, rose 0.4% (3.9% y/y) following a 1.5% decline. Commercial construction rose 0.7% (23.7% y/y) after a 5.8% jump. Weakening by 1.9% (+33.7% y/y) was office construction as it came after a 1.9% decline.

The construction spending figures, some of which date back to 1946 (e.g., public construction figures), are in Haver's USECON database and the expectations figure can be found in the AS1REPNA database.

Construction Put in Place (SA, %) Jul Jun May Jul Y/Y 2017 2016 2015
Total 0.1 -0.8 0.7 5.8 4.5 7.0 10.7
  Private -0.1 -0.5 0.2 5.1 7.1 9.2 12.9
    Residential 0.6 -0.9 -0.3 6.6 12.4 10.7 14.2
    Nonresidential -1.0 0.1 0.7 3.2 1.3 7.7 11.5
  Public 0.7 -1.7 2.7 8.3 -3.2 0.7 5.1
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