The dollar value of new construction activity on residential, non-residential, and public projects. Data are available in nominal and real (inflation-adjusted) dollars. Why Investors Care
| Released on 9/2/08 For Jul 2008 | ||||||||||||
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Highlights
Construction spending in July resumed a decline after rebounding for two months. Weakness may be spreading beyond housing. Construction outlays fell 0.6 percent in July, following a rise of 0.3 percent in June. The July decrease was worse than the consensus expectation of a 0.3 fall. The July decline was led by private residential outlays which fell 2.3 percent. Private nonresidential outlays also declined - by 0.7 percent - while public expenditures rose 1.4 percent. The bottom line is that residential construction is falling more that typical - just based on starts. Weakness now may be spreading to the nonresidential sector. Today's numbers add to the argument that third quarter GDP is likely to be near flat.
By component, the decline in private residential outlays was led by a 2.3 percent decrease in single-family outlays in July while the multifamily component rose 0.2 percent. The drop in the private nonresidential component was led by declines in manufacturing, down 5.0 percent; religious, down 2.5 percent; and power, down 2.2 percent.
On a year-on-year basis, overall construction outlays rose to down 4.8 percent in July from down 5.1 percent in June.
Bonds should like the construction news while equities should not. However, today's big story is still that Hurricane Gustav did minimal damage to oil facilities in the Gulf and the price of oil has fallen sharply.
Construction spending in June resumed a downtrend on a further drop in housing construction. Construction outlays fell 0.4 percent in June, following no change in May. The June decrease was led by a 1.8 percent decrease in private residential outlays with public outlays also dipping 0.2 percent. However, private nonresidential spending continued to be a source of strength with a 0.8 percent boost for June. Looking ahead, the latest dip in housing starts suggests that construction spending will remain soft in July.
Construction spending Consensus Forecast for July 08: -0.3 percent
Range: -0.7 to +0.2 percent
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Over the last year, a decline in residential outlays has pulled down year-on-year growth for overall construction outlays. Nonresidential and public outlays are positive with nonresidential actually strong. |
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