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Economy in Brief

U.S. Construction Spending Growth Slowed in September; Revisions Mixed in July and August
by Carol Stone, CBE  November 2, 2020

• Construction spending increased just 0.3% in September, with August revised down and July revised somewhat higher.

• Residential showing consistently sizable increases; nonresidential down three months in a row.

• Both state & local gov't and federal gov't construction decrease.

The value of construction put in place rose just 0.3% in September (1.9% year/year), less than the 0.9% projected in the Action Economics forecast survey. The amount of construction activity in August was revised down to an 0.8% gain from 1.1% reported a month ago, while the July total was revised upward to 1.1% from 0.7%.

The slowdown in total construction growth occurred in all major sectors. Private residential construction remained the strongest in month-to-month expansion with a 2.8% increase in September, although less than the 3.3% in August. The September gain raised the year/year advance to 9.9%. Single-family home construction increased 5.7% (+8.2% y/y) in the month, while home improvements actually had an outright decline of 0.4%, although that still left the year/year move at +11.1%.

Private nonresidential construction fell 1.5% in September, the third monthly decline in a row and the largest one. A 5.8% decline year-on-year was the result. Among building use types, only offices (+0.3%) and religious (+2.8%) had increases in the month. The largest decreases were in amusements (-2.7%), power generation (-2.2%) and manufacturing (-2.1%).

In the public sector, state and local government construction fell 1.2% in September (0.1% year/year), the fifth monthly decline in the last six months. The two largest segments of that sector, highway and street construction dropped 5.4% (-2.5% year/year) while education actually rose 2.1% (-0.9% year/year). Federal government building decreased 6.7% in the month, a third consecutive decrease and down 6.1% year/year.

The construction spending figures, some of which date back to 1946 can be found in Haver's USECON database. The Action Economics expectations reading is in the AS1REPNA database.

Construction Put in Place (SA, %) Sep Aug Jul Sep Y/Y 2019 2018 2017
Total 0.3 0.8 1.1 1.9 2.4 4.2 4.6
  Private 0.9 1.5 2.1 2.7 0.8 4.0 6.1
    Residential 2.8 3.3 3.9 9.9 -2.4 3.4 12.4
    Nonresidential -1.5 -0.6 -0.1 -5.8 4.5 4.8 -0.7
  Public -1.7 -1.3 -1.7 -0.4 7.8 4.6 -0.1
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