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Economy in Brief

U.S. Construction Spending Unexpectedly Falls in June After Eight Straight M/M Gains
by Winnie Tapasanun  August 1, 2022

• Total construction -1.1% m/m (+8.3% y/y); May revised up but April revised down.

• Residential private construction drops 1.6% m/m, first decline since May '20, led by monthly decreases of 3.1% in single-family building and 0.3% in home improvement building.

• Nonresidential private construction declines 0.5% m/m, down for the fourth straight month.

• Public sector construction falls 0.5% m/m, down for the second consecutive month following four successive m/m rises, led by a 0.5% decline in nonresidential public construction.

The value of construction put in place fell 1.1% m/m (+8.3% y/y) in June after an upwardly revised 0.1% uptick in May (-0.1% initially) and a downwardly revised 0.7% rise in April (+0.8% previously), according to the U.S. Census Bureau. The June m/m reading was the first monthly decline since September and the deepest since April 2020. A 0.3% m/m June increase had been expected in the Action Economics Forecast Survey.

Private construction fell 1.3% (+10.4% y/y) in June following an upwardly revised 0.2% May increase (+0.01% initially) and seven straight m/m gains. Residential private construction slid 1.6% (+15.6% y/y), the first m/m slide since May 2020 and the deepest since April 2020, after a 0.8% May rise. Single-family building fell 3.1% (+8.4% y/y), the first monthly fall since October and the largest since May 2020, after a 0.3% May increase. Home improvement building was down 0.3% (+33.0% y/y), the first m/m decline since September 2020, after a 1.9% May increase. Multi-family building, however, rose 0.4% (-0.1% y/y) in June following a 0.4% May decline and a 0.3% April increase.

Nonresidential private construction fell 0.5% (+1.7% y/y) in June, the fourth straight m/m fall, after a 0.9% drop in May. Religious construction decreased 2.8% (-0.4% y/y) vs. a 6.6% May rebound. Utilities private construction fell 1.8% (-14.9% y/y), the fourth successive m/m fall. Transportation building dropped 1.0% (-6.4% y/y) vs. two consecutive monthly rises. Heath care private construction slid 0.9% (+2.6% y/y), the second consecutive m/m slide. Commercial building fell 0.6% (+10.8% y/y), the third monthly fall in four months. Lodging construction eased 0.2% (-5.5% y/y) following two straight m/m gains. Amusement & recreation private construction dipped 0.1% (+5.4% y/y), the third monthly decline in four months. Manufacturing construction ticked down 0.1% (+20.2% y/y), the first m/m easing since March. In contrast, communication private construction rose 1.0% (-3.0% y/y) following a 0.5% May rise and five straight m/m drops. Office building grew 0.5% (-2.1% y/y) vs. a 0.3% May decline. Educational private construction ticked up 0.1% (17.5% y/y), the fourth m/m increase in five months.

The value of public construction fell 0.5% (+0.4% y/y) in June after a 0.7% decline in May, with residential public construction up 0.5% (-2.1% y/y) and nonresidential public construction down 0.5% (+0.5% y/y). Spending on highways & streets, which makes up 28.2% of public construction spending, worsened 2.7% (-1.1% y/y), the third m/m decrease in four months. Office public construction slid 1.8% (+3.4% y/y), the third m/m slide in four months, after a 3.0% May increase. Educational public construction fell 0.7% (-4.8% y/y), the fourth consecutive m/m fall. Utilities public construction eased 0.2% (+21.9% y/y), the third straight monthly decline. Public safety construction was unchanged (-6.5% y/y) following a 3.9% May rebound. To the upside, water supply construction jumped 7.4% (13.2% y/y), the largest of six straight monthly rises. Commercial public construction increased 2.4% (1.9% y/y), the fourth m/m advance in five months. Health care public construction rose 1.7% (11.2% y/y), the fifth monthly rise in six months. Conservation & development public construction rebounded 1.7% (10.5% y/y) following two successive monthly drops. Amusement & recreation public construction rose 1.5% (2.7% y/y) vs. a 1.8% May decrease. Sewage & waste disposal construction grew 0.5% (7.0% y/y), the fifth m/m increase in six months, after a 0.3% May decline.

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

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