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Economy in Brief

U.S. Construction Spending Losing Steam 
by Tom Moeller September 1, 2005

The value of construction put in place dipped slightly in July following a 0.6% decline in June, although figures for May were revised sharply higher. Consensus expectations had been for a 0.5% increase.

Private residential building activity rose slightly as did the value of residential building. New single family building rose 0.1% (9.0% y/y) following gains of 1.0% and 1.3% during the prior two months. The y/y growth in residential building is down by more than half from the peak growth rates of 2004.

Nonresidential building rose 0.2% following the downwardly revised 1.6% June decline but office construction (-1.0% y/y) fell hard for the third straight month.

Public construction spending fell for the second consecutive month as construction activity on highways & streets, nearly one third of the value of public construction spending, fell 2.4% (+7.0% y/y) for the fifth decline this year. While states' spending on highways & streets is up 8.0% y/y, federal spending is down by more than half versus last year.

These more detailed categories represent the Census Bureau’s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.

Construction Put-in-place July June Y/Y 2004 2003 2002
Total -0.0% -0.6% 6.0% 10.9% 5.4% 1.0%
Private 0.2% -0.6% 6.6% 13.6% 6.3% -0.4%
  Residential 0.2% -0.2% 8.5% 18.2% 12.9% 8.5%
  Nonresidential 0.2% -1.6% 2.0% 3.9% -5.4% -13.0%
Public -0.8% -0.6% 3.9% 2.5% 2.7% 5.7%
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