Construction Spending Rebounds in August. July Revised Lower
Total construction spending jumped in August but any optimism from the fresh data was offset by downward revisions to the prior month.
The construction sector improved by 0.8% in August, in contrast to expectations that it would fall 0.1%. But spending in July fell by a whopping 1.1% in the new estimates, compared to the original projection of -0.2%.
What’s really going on in the market can’t be seen in the headline alone. The main trend is that residential housing is heading upwards, including a 4.7% gain in August. But non-residential and government construction on weighing heavily on the index. Non-residential activity slipped 0.1% in August, while and public spending fell 1.1%.
Compared to last year, total spending is down 11.6%.
The data suggests “the drag on GDP growth from residential investment ended in the third quarter, although it appears that spending on nonresidential structures will be a larger drag in the third quarter than in the second,” said economists at RDQ.
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