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Economy in Brief

U.S. Construction Spending Grows; Previous Months Net Revised Higher
by Gerald D. Cohen  November 1, 2019

The value of construction put-in-place grew a greater-than-expected 0.5% in September (-1.8% year-on-year) with net upward revisions in previous months. While August was revised down to a 0.3% decline (was +0.1%), July was revised meaningfully higher (+0.5% vs. unchanged). The Action Economics Forecast Survey had expected a 0.2% rise in September. Based on this data, the construction spending portion of third quarter GDP is likely to be revised higher. In the third quarter GDP report released on Wednesday private construction spending (nonresidential + residential) subtracted 0.3 percentage point from GDP growth.

Private construction increased 0.2% (-4.9% y/y) in September while public jumped 1.5% (7.2% y/y).

Residential construction led the increase in the private sector, up 0.6% (-3.7% y/y) with single family growing 1.3% (-4.8% y/y) and multifamily contracting 0.7% (-0.5% y/y). Nonresidential construction declined 0.3% (-6.2% y/y) with commercial decreasing 0.8% (-22.0% y/y) and power down 1.4% (-2.2% y/y). Other largest sectors – manufacturing and office – grew 1.2% and 0.3% respectively (-4.1% and +0.9% y/y).

Nonresidential construction, which makes up 98% of public construction, increased 1.5% in September (7.2% y/y). Construction of highways and streets, the largest category in the public sector, jumped 2.6% (6.7% y/y). Education construction, the second largest category, rose 3.1% (0.7% 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, %) Sep Aug Jul Sep Y/Y 2018 2017 2016
Total 0.5 -0.3 0.5 -1.8 3.3 4.5 7.1
  Private 0.2 -0.3 0.4 -4.9 3.2 6.0 9.3
    Residential 0.6 0.8 1.0 -3.7 2.8 12.4 10.6
    Nonresidential -0.3 -1.5 -0.3 -6.2 3.7 -0.7 7.9
  Public 1.5 -0.4 0.7 7.2 3.6 -0.1 1.1
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