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Economy in Brief

U.S. Construction Spending Declines Unexpectedly; Upward Revisions Softens Blow
by Gerald D. Cohen  February 3, 2020

• Construction spending decreased 0.2% in December.

• Upward revisions to previous months suggest little impact on Q4 GDP.

• Strong residential construction was offset by weak nonresidential, consistent with the Q4 GDP data.

The value of construction put-in-place declined 0.2% in December (+5.0% year-on-year). November was revised up to a 0.7% gain (was 0.6%), while October was recast to 0.4% from 0.1%. The Action Economics Forecast Survey had expected a 0.4% rise in December. This data is unlikely to have a meaningful impact on the construction spending portion of fourth quarter GDP. In the fourth quarter GDP report released last week, private construction spending (nonresidential + residential) subtracted 0.1 percentage point from GDP growth.

Private construction edged down 0.1% (+2.9% y/y) in December while public contracted 0.4% (+11.5% y/y).

Residential construction increased 1.4% (5.5% y/y) with the 2.7% gain in single family (5.2% y/y), more than offsetting the 1.8% decline in multifamily (-7.1% y/y). Nonresidential construction fell 1.8% (-0.1% y/y) with the four largest sectors -- power, commercial, manufacturing, and office all down in December.

Nonresidential public construction, which makes up 98% of public construction, declined 0.4% in December (+11.2% y/y), with decreases in school spending and gains in road building.

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, %) Dec Nov Oct Dec Y/Y 2019 2018 2017
Total -0.2 0.7 0.4 5.0 -0.3 3.3 4.5
  Private -0.1 0.6 0.6 2.9 -2.5 3.2 6.0
    Residential 1.4 1.5 0.5 5.5 -4.7 2.8 12.4
    Nonresidential -1.8 -0.5 0.8 -0.1 0.0 3.7 -0.7
  Public -0.4 1.0 -0.2 11.5 7.1 3.6 -0.1
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