September 2018 Headline Construction Spending Unchanged

The headlines say construction was unchanged month-over-month but was on the lower end of expectations. The rolling averages improved.

Analyst Opinion of Construction Spending

The rolling averages improved – and last month was moderately revised upward. Also, note that inflation is grabbing hold.

The employment gains currently are generally correlating with construction spending.

Econintersect analysis:

Growth decelerated 0.7 % month-over-month and up 6.4 % year-over-year.

Inflation-adjusted construction spending up 2.8 % year-over-year.

3 month rolling average is 6.5 % above the rolling average one year ago which accelerated 0.4 % month-over-month. As the data is noisy (and has so much backward revision) – the moving averages likely are the best way to view construction spending.

Backward revision for the last 3 months was overall upward.

US Census Analysis:

unchanged month-over-month and up 7.2 % (was published 6.5 % last month) year-over-year.

Market expected from Econoday -0.2 % to 0.8 % month-over-month (consensus +0.3).

Construction spending (unadjusted data) was declining year-over-year for 48 straight months until November 2011. That was four years of headwinds for GDP.

This month’s headline statement from US Census:

Construction spending during September 2018 was estimated at a seasonally adjusted annual rate of $1,329.5 billion, nearly the same as (±1.5 percent)* the revised August estimate of $1,328.8 billion. The September figure is 7.2 percent (±1.8 percent) above the September 2017 estimate of $1,240.4 billion. During the first nine months of this year, construction spending amounted to $982.9 billion, 5.5 percent (±1.2 percent) above the $931.3 billion for the same period in 2017.

PRIVATE CONSTRUCTION – Spending on private construction was at a seasonally adjusted annual rate of $1,020.4 billion, 0.3 percent (±1.0 percent)* above the revised August estimate of $1,016.9 billion. Residential construction was at a seasonally adjusted annual rate of $556.4 billion in September, 0.6 percent (±1.3 percent)* above the revised August estimate of $553.4 billion. Nonresidential construction was at a seasonally adjusted annual rate of $463.9 billion in September, 0.1 percent (±1.0 percent)* above the revised August estimate of $463.5 billion.

PUBLIC CONSTRUCTION – In September, the estimated seasonally adjusted annual rate of public construction spending was $309.1 billion, 0.9 percent (±2.6 percent)* below the revised August estimate of $312.0 billion. Educational construction was at a seasonally adjusted annual rate of $74.6 billion, 1.2 percent (±3.1 percent)* above the revised August estimate of $73.7 billion. Highway construction was at a seasonally adjusted annual rate of $95.2 billion, 1.1 percent (±6.9 percent)* below the revised August estimate of $96.2 billion.