Highlights
The delayed August U.S. construction spending report (due to the federal government shutdown) showed activity stayed modest through the end of summer, with July's previously reported contraction revised to indicate a decent uptick.
U.S. construction spending maintained a steady pace in August, rising by 0.2 percent compared to expectations for a 0.1 percent dip in the Econoday survey of forecasters. July was revised to a 0.2 percent increase from June (previously reported at -0.1 percent). Still, the estimated level of construction spending in August is 1.6 percent lower than August 2024.
Private construction spending in August rose 0.3 percent from July. Residential construction spending jumped 0.8 percent and non-residential shrank by 0.3 percent.
Public construction spending was unchanged from July.
U.S. construction spending maintained a steady pace in August, rising by 0.2 percent compared to expectations for a 0.1 percent dip in the Econoday survey of forecasters. July was revised to a 0.2 percent increase from June (previously reported at -0.1 percent). Still, the estimated level of construction spending in August is 1.6 percent lower than August 2024.
Private construction spending in August rose 0.3 percent from July. Residential construction spending jumped 0.8 percent and non-residential shrank by 0.3 percent.
Public construction spending was unchanged from July.
Market Consensus Before Announcement
Spending is expected to continue its slow decline with another 0.1 percent dip in August after decreasing by 0.1 percent in July.
Definition
The dollar value of new construction activity on residential, non-residential, and public projects. Data are available in nominal and real (inflation-adjusted) dollars.
Description
Construction spending has a direct bearing on stocks, bonds and commodities because it is a part of the economy that is affected by interest rates, business cash flow and even federal fiscal policy. In a more specific sense, trends in the construction data carry valuable clues for the stocks of home builders and large-scale construction contractors. Commodity prices such as lumber are also very sensitive to housing industry trends.
Businesses only put money into the construction of new factories or offices when they are confident that demand is strong enough to justify the expansion. The same goes for individuals making the investment in a home.
A portion of construction spending is related to government projects such as education buildings as well a highways and streets. While investors are more concerned with private construction spending, the government projects put money in the hands of laborers who then have more money to spend on goods and services.
On a technical note, construction outlays for private residential, private nonresidential, and government are key inputs into three components of GDP--residential investment, nonresidential structures investment, and the structures portion of government expenditures.
That is why construction spending is a good indicator of the economy's momentum.
Businesses only put money into the construction of new factories or offices when they are confident that demand is strong enough to justify the expansion. The same goes for individuals making the investment in a home.
A portion of construction spending is related to government projects such as education buildings as well a highways and streets. While investors are more concerned with private construction spending, the government projects put money in the hands of laborers who then have more money to spend on goods and services.
On a technical note, construction outlays for private residential, private nonresidential, and government are key inputs into three components of GDP--residential investment, nonresidential structures investment, and the structures portion of government expenditures.
That is why construction spending is a good indicator of the economy's momentum.
