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Economy in Brief

U.S. Construction Spending Unexpectedly Weakens
by Tom Moeller  August 1, 2019

Building sector activity continues to weaken. The value of construction put-in-place fell 1.3% (-2.0% y/y) during June following a 0.5% May decline, revised from -0.8. A 0.3% rise had been expected in the Action Economics Forecast Survey.

Construction activity in the private sector fell 0.4% (-4.6% y/y), down for the fourth straight month. Residential construction declined 0.5% (-7.3% y/y), continuing a slide that began last year. The value of home improvements declined 0.5% (-10.2% y/y) and reversed the 0.7% May rise. Single-family building eased 0.7% (-8.5% y/y) and has been trending lower since early last year. Countering these declines was a 0.2% rise (10.1% y/y) in multi-family construction, the value of which was a record high.

Private nonresidential building activity declined 0.3% (-1.1% y/y) during June, down for the third consecutive month. Office construction improved 0.4% (8.9% y/y) while commercial building rose 1.3% (-11.8% y/y). Manufacturing building rose 0.9% (7.8% y/y). Health care construction improved 0.5% (4.8% y/y) but transportation sector building weakened 5.4% (+5.4% y/y). Power construction fell 2.1% (-4.9% y/y).

Public sector building activity declined 3.7% during June (+6.0% y/y) following a 1.2% slump. Construction of highways & streets fell 6.4% (+6.8% y/y). It accounts for roughly one-third of the dollar value of public building activity. Transportation sector building eased 0.3% (+8.5% y/y) while commercial construction rose 2.9% (+17.6% y/y). Health care building declined 3.4% (-11.7% y/y).

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, %) Jun May Apr Jun Y/Y 2018 2017 2016
Total -1.3 -0.5 0.9 -2.0 3.9 4.5 7.0
  Private -0.4 -0.3 -0.0 -4.6 3.1 7.1 9.2
    Residential -0.5 0.0 0.9 -7.3 2.8 12.4 10.7
    Nonresidential -0.3 -0.6 -1.1 -1.1 3.4 1.3 7.7
  Public -3.7 -1.2 3.6 6.0 6.4 -3.2 0.7
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