U.S. Construction Spending Surprises to Upside in September
by:Sandy Batten
|in:Economy in Brief
Summary
- Residential construction remained challenged by rising interest rates; nonresidential building rebounded.
- Public sector construction declined for second month.
The value of construction put in place unexpectedly rose 0.2% m/m (10.9% y/y) in September with a small upward revision to both (-0.6% m/m versus -0.7% initially) and a meaningful upward revision to July (+0.8% versus -0.6% initially). The Action Economics Forecast Survey had expected a 0.5% m/m decline in September. Residential construction was essentially unchanged in September (+12.6% y/y) following three consecutive monthly declines. Clearly, the Federal Reserve's aggressive tightening of policy is weighing on the residential housing market. By contrast, nonresidential construction rose 0.5% m/m (9.2% y/y), its third increase in the past four months.
Private construction rebounded in September, rising 0.4% m/m (11.9% y/y) but failed to regain the 0.7% m/m decline in August. Private residential construction was unchanged in September from August (+12.7% y/y) after having declined in each of the three previous months. Construction of single family homes fell 2.6% m/m in September, its fifth consecutive monthly decline while construction of multi-family homes increased 0.3%, the same monthly gain as in August.
Private nonresidential construction increased 1.0% m/m (+10.5% y/y) in September after having been essentially unchanged in August. The September increase was more than accounted for by a 7.6% m/m jump in manufacturing construction spending. Excluding manufacturing, the rest of private nonresidential construction fell 0.6% m/m in September after a 0.1% monthly decline in August.
The value of public construction declined 0.4% m/m (+7.1% y/y) in September, the same monthly decline as in August. Almost all of public construction is nonresidential. This fell 0.3% m/m in September, the same monthly decline as in August. Highways, Education and Transportation account for nearly two-thirds of total public nonresidential construction. Construction spending rose in each of these three key areas in September, rising a total of 0.6% m/m after a 0.6% m/m decline in August.
The construction spending figures, some of which date back to 1946, can be found in Haver's USECON database. The expectations reading is in the AS1REPNA database.
Sandy Batten
AuthorMore in Author Profile »Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia. Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan. In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association. Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.
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