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Economy in Brief

U.S. Construction Spending Drops More Than Expected in August
by Winnie Tapasanun  October 3, 2022

• Total August construction -0.7% (+8.5% y/y); July revised down to -0.6% but June revised up to +0.6% (from a drop).

• Residential private construction decreases 0.9% (+12.5% y/y), the third straight m/m decline, led by a 2.9% drop (-0.02% y/y) in single-family building.

• Nonresidential private construction edges down 0.1% (+5.5% y/y), the same m/m pace as July (revised down from a rise).

• Public sector construction declines 0.8% (+3.3% y/y), the first m/m slide since May, reflecting drops of 2.7% (-0.2% y/y) in residential public construction and 0.8% (+3.4% y/y) in nonresidential public construction.

The value of construction put in place fell 0.7% m/m (+8.5% y/y) in August after a downwardly revised 0.6% decline in July (-0.4% initially) and an upwardly revised 0.6% gain in June (-0.5% previously), according to the U.S. Census Bureau. The August result was the second consecutive monthly fall following nine straight m/m rises. A 0.2% m/m August decline had been expected in the Action Economics Forecast Survey.

Private construction decreased 0.6% (+9.9% y/y) in August following a downwardly revised 1.2% July decline (-0.8% initially) and nine successive m/m gains. Residential private construction fell 0.9% (+12.5% y/y), the third consecutive m/m fall, after a 1.7% July drop (-1.5% initially). Single-family building slid 2.9% (-0.02% y/y), the third straight m/m slide, after a 4.3% July decrease. Multi-family building, however, recovered 0.4% (-0.2% y/y), the second m/m gain in three months, after a 0.4% July decline. Home improvement building rose 1.0% (37.2% y/y) in August after a 1.3% July rise, continuing its meaningful string of gains since August 2021.

Nonresidential private construction ticked down 0.1% (+5.5% y/y) in August following a 0.1% easing in July (+0.4% initially) and two successive m/m increases. The August downtick reflected drops of 0.9% (-14.2% y/y) in utilities private construction, 0.5% (+21.6% y/y) in manufacturing construction, and 0.3 (+16.7% y/y) in educational private construction. Commercial building was virtually unchanged (+19.4% y/y) after a 0.1% July downtick and three consecutive m/m rises. To the upside, lodging construction increased 1.7% (10.0% y/y), the fifth straight m/m gain. Transportation private building rose 1.2% (-3.7% y/y), the fourth m/m rise in five months. Religious construction grew 0.9% (6.5% y/y), the third m/m gain in four months. Amusement & recreation private construction rose 0.5% (10.7% y/y), the third successive m/m rise. Communication private construction grew 0.4% (-0.9% y/y), the smallest of four consecutive m/m gains. Office building increased 0.3% (-1.2% y/y) and heath care private construction rebounded 0.1% (8.5% y/y).

The value of public construction fell 0.8% (+3.3% y/y) in August, the first m/m fall since May, after a 1.9% advance in July (+1.5% initially), with residential public construction down 2.7% (-0.2% y/y) and nonresidential public construction down 0.8% (+3.4% y/y). Office public construction fell 5.1% (+1.3% y/y), the deepest m/m fall since October 2020, after a 1.9% July rebound. Health care public construction (-2.1%; +5.7% y/y), commercial public construction (-1.5%; +11.2% y/y), and public safety construction (-1.2%; +0.3% y/y) posted their first m/m drops since April. Spending on highways & streets, which makes up 28.7% of public construction spending, slid 1.4% (+1.7% y/y), the third m/m slide in four months. Water supply construction fell 1.1% (+23.1% y/y), the first m/m fall since December. Educational public construction was down 0.4% (-3.0% y/y), the fifth m/m drop in six months. Transportation public construction fell 0.4% (+0.9% y/y) after a 0.6% July rebound. Utilities public construction slipped 0.1% (+7.4% y/y), the fourth m/m decline in five months. In contrast, sewage & waste disposal construction (1.5%; 11.5% y/y) and conservation & development public construction (1.4%; 18.6% y/y) registered their third straight m/m increases; amusement & recreation public construction rose 0.7% (7.0% y/y) following a 0.02% July downtick.

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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