The U.S. Census Bureau of the Department of Commerce announced that construction spending during July 2016 was estimated at a seasonally adjusted annual rate of $1,153.2 billion, nearly the same as (±1.5 percent) the revised June estimate of $1,153.5 billion. The July figure is 1.5 percent (±2.3 percent) percent above the July 2015 estimate of $1,135.9 billion.
During the first seven months of this year, construction spending amounted to $647.7 billion, 5.6 percent (±1.3 percent) above the $613.1 billion for the same period in 2015.
Spending on private construction was at a seasonally adjusted annual rate of $875.0 billion, 1.0 percent (±1.5 percent) percent above the revised June estimate of $866.5 billion.
- Residential construction was at a seasonally adjusted annual rate of $445.5 billion in July, 0.3 percent (±1.3 percent) percent above the revised June estimate of $444.0 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $429.5 billion in July, 1.7 percent (±1.5 percent) above the revised June estimate of $422.5 billion.
In July, the estimated seasonally adjusted annual rate of public construction spending was $278.2 billion, 3.1 percent (±2.6 percent) below the revised June estimate of $287.0 billion. Educational construction was at a seasonally adjusted annual rate of $64.6 billion, 8.3 percent (±3.9 percent) below the revised June estimate of $70.4 billion.
Highway construction was at a seasonally adjusted annual rate of $89.8 billion, 0.3 percent (±6.4 percent) percent above the revised June estimate of $89.5 billion.
“The key concept in this report, core construction, is not itemized,” said Patrick Newport, U.S. Economist for IHS Global Insight. “It's calculated by adding four pieces used as source data in the national income accounts: single-family, multifamily, state and local government, and private nonresidential construction. Core spending slipped 2.4 percent in the second quarter but is on track to rebound in the third. Its recent trend, however, is a flat one, as steady decreases in public construction have cancelled out steady increases in nonresidential construction.
“Residential spending fell in the second quarter and is struggling in the third,” Newport continued. “At this point, we are not too concerned because new home sales have been strong lately, which should translate into a pickup in housing starts and residential spending in the upcoming quarters.
“Last month, we wrote, ‘private nonresidential spending has been about flat for the last 12 months,’” Newport said. “Thanks to across-the-board upward data revisions, this category is growing smartly and is almost a cinch to surpass 10 percent annual rate growth in the third quarter. Our outlook for the nonresidential category, which is mainly driven by the medium- to long-term economic outlook, is for modest gains in the second half of 2016 and in 2017.
“Public spending fell 3.1 percent in July and is on track to drop by more than 10 percent for the second straight quarter,” Newport concluded. “We are not too concerned; with federal support infrastructure spending in the pipeline, spending should pick before the end of the year. Although spending was flat in July, this report was a good-news one because of upward revisions to spending in May and June.”