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October 1, 2018 | Construction Spending Weakness: Private Spending Down 0.5%, Government Up 2.0%

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
A surge in gov’t spending kept construction spending in the green by 0.1%. Private spending is down and trending lower.

Construction spending reports are volatile and heavily revised, but given the weakness in most housing reports, the Monthly Construction Report for August rings true.

Total Construction

Construction spending during August 2018 was estimated at a seasonally adjusted annual rate of $1,318.5 billion, 0.1 percent above the revised July estimate of $1,317.4 billion.

Private Construction

Spending on private construction was at a seasonally adjusted annual rate of $1,001.7 billion, 0.5 percent below the revised July estimate of $1,006.9 billion. Residential construction was at a seasonally adjusted annual rate of $548.9 billion in August, 0.7 percent below the revised July estimate of $553.0 billion. Nonresidential construction was at a seasonally adjusted annual rate of $452.9 billion in August, 0.2 percent below the revised July estimate of $453.9 billion.

Public Construction

Public construction spending was $316.7 billion, 2.0 percent above the revised July estimate of $310.5 billion. Educational construction was at a seasonally adjusted annual rate of $72.3 billion, 1.0 percent above the revised July estimate of $71.7 billion. Highway construction was at a seasonally adjusted annual rate of $99.0 billion, 1.7 percent above the revised July estimate of $97.3 billion.

Select Seasonally-Adjusted Spending Numbers

  • Total -0.1%
  • Private: -0.5%
  • Private Residential -0.7%
  • Private Multi-Family -1.7%
  • Private Non-Residential -0.2%
  • Public: +2.0%
  • Public Highway: +1.7%
  • Public Education: +1.0%

Year-Over-Year Private Residential Construction

Year-Over-Year Private Construction

Commercial projects are larger and take longer. Once started they complete.

Businesses spending is planned years ahead so the cycles are different.

The chart suggests commercial lags residential heading into and out of recessions.

A hurricane reconstruction impact may temporarily boost the numbers for a while but the overall trends look poor.

Mike “Mish” Shedlock

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October 1st, 2018

Posted In: Mish Talk

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