According to the U.S. Census Bureau, August construction spending was estimated at a seasonally adjusted annual rate of $1,142.2 billion. This is .7% below July’s revised estimate of $1.150.6 billion. The drop was somewhat unexpected; some economists expected a .1% increase. However, this is the third month-to-month decline in the past five months. Augusts 2016 construction spending is .3% lower than spending in August 2015. Overall, for the first 8 months of 2016, construction spending is 4.9% higher than spending during the same period in 2015.
Economists believe that the slowdown in construction will be temporary, with the ultra-low interest rates and growing economy prompting greater building activity in coming months. “While demand for construction remains robust, it is no longer growing like it was earlier this year,” said Ken Simonson, chief economist for the Associated General Contractors of America. Simonson added that the industry could get a boost if policymakers move to upgrade “our aging infrastructure.”
Public construction spending fell 2% from July. Spending in the public sector is down 8.8% from a year ago, reflecting an effort to control budget deficits at all levels of government. Spending on public projects is at the lowest level since March, 2014.
In contrast, non-residential construction spending shows the strongest growth in the last twelve months. Spending on office buildings and hotels were both up in August. Spending in this category is up 4.2 percent from a year ago. Residential spending has also risen by 1.4%.
For more information, click here.