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Economy in Brief

U.S. Construction Spending Declines for the Second Straight Month in July
by Winnie Tapasanun  September 1, 2022

• Total July construction -0.4% m/m (+8.5% y/y); June and May revised up.

• Residential private construction falls 1.5% m/m (+14.1% y/y), the largest monthly decline since April '20, led by m/m drops of 4.0% in single-family building and 0.6% in multi-family building.

• Nonresidential private construction increases 0.4% m/m (3.1% y/y), up for the third straight month.

• Public sector construction rises 1.5% m/m (3.3% y/y), up for the sixth time in seven months, led by a 1.5% gain (3.3% y/y) in nonresidential public construction.

The value of construction put in place fell 0.4% m/m (+8.5% y/y) in July after upward revisions to a 0.5% decline in June (-1.1% initially) and a 0.7% gain in May (+0.1% previously), according to the U.S. Census Bureau. The July result was the second consecutive monthly decline following eight straight m/m increases. No change in construction spending (0.0% m/m) for July had been expected in the Action Economics Forecast Survey.

Private construction decreased 0.8% (+9.9% y/y) in July following an upwardly revised 0.7% June decline (-1.3% initially) and eight successive m/m gains. Residential private construction slid 1.5% (+14.1% y/y), the second consecutive m/m slide and the deepest since April 2020, after a 1.1% June drop (-1.6% initially). Single-family building fell 4.0% (+2.9% y/y), the largest monthly fall since May 2020, after a 2.5% June decrease. Multi-family building declined 0.6% (-1.2% y/y), reversing a 0.6% June rise. Home improvement building, however, rose 1.5% (38.3% y/y) in July after a 0.1% June uptick, continuing its meaningful string of gains since August 2021's 2.3%.

Nonresidential private construction rose 0.4% (3.1% y/y) in July, the third consecutive m/m rise, after a 0.2% increase in June (-0.5% initially). Amusement & recreation private construction recovered 1.6% (9.0% y/y) vs. a 0.7% June drop. Religious construction grew 1.3% (1.1% y/y), the third straight monthly gain. Educational private construction rose 1.2% (16.2% y/y), the fifth m/m increase in six months. Communication private construction was up 0.9% (-2.6% y/y), registering the third successive m/m rise following five consecutive m/m declines. Commercial building increased 0.7% (13.7% y/y) after a 0.1% June downtick and two straight m/m rises. Lodging construction grew 0.6% (0.3% y/y), the fifth m/m gain in six months. Manufacturing construction rebounded 0.6% (19.2% y/y), the third m/m gain in four months. Office building was up 0.1% (-1.9% y/y) after a 0.4% June rebound. Utilities private construction ticked up 0.05% (-13.7% y/y) following a 0.5% June rise and three successive m/m drops. Transportation building edged up 0.04% (-7.8% y/y) vs. a 0.9% June decline. In contrast, heath care private construction fell 1.2% (+5.5% y/y) in July after having recovered 1.4% in June.

The value of public construction grew 1.5% (3.3% y/y) in July, the sixth m/m gain in seven months, after a 0.1% uptick in June (-0.5% initially), with residential public construction up 0.8% (3.5% y/y) and nonresidential public construction up 1.5% (3.3% y/y). Spending on highways & streets, which makes up 29.1% of public construction spending, recovered 4.3% (4.3% y/y) following two consecutive m/m drops. Office public construction increased 2.9% (5.7% y/y) after a 2.6% June decrease. Public safety construction grew 2.2% (-4.8% y/y), the third straight m/m gain. Conservation & development public construction rose 1.7% (4.8% y/y) following three successive m/m declines. Commercial public construction was up 0.2% (2.1% y/y), the smallest of three consecutive m/m increases. Utilities public construction rose 0.2% (4.7% y/y), the first m/m rise since March. To the downside, health care public construction fell 1.4% (+6.6% y/y) in July, the first m/m fall since April. Water supply construction slid 0.6% (+20.3% y/y), the first m/m slide since December. Sewage & waste disposal construction declined 0.3% (+7.1% y/y) after a 1.4% June rebound. Educational public construction ticked down 0.1% (-2.1% y/y), the smallest of five straight m/m declines. Amusement & recreation public construction slipped 0.1% (+6.8% y/y) vs. a 2.7% June rise.

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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