Slight Hike in August Construction Spending
Nearly 14 Percent Jump Year-to-Year
Total construction spending was up less than 1 percent in August, compared to July, but has grown 13.7 percent on an annual basis. It is also up almost 10 percent for the year-to-date (January to August.)
Construction spending in August amounted to slightly more than $1 billion and was 0.7 percent better than the previous month, the U.S. Census Bureau said. It is also a 13.7 percent jump over the same month in 2014.
Year-to-date, or from January to August, construction spending was nearly 10 percent above the same eight-month period last year.
Total construction spending includes both the private and public sectors. Residential was 1.3 percent higher, month-to-month, and jumped 16.4 percent compared to August 2014. Nonresidential was 0.3 percent better, compared to July, and up 12.3 percent on a yearly basis.
All nonresidential subcategories were little changed month-to-month, but some posted significant gains year-to-year. Lodging was up 41.4 percent, office construction improved 25.4 percent, amusement and recreation climbed 34.7 percent, conservation and development increased 12.7 percent, and communication grew by 11.5 percent, all compared to August 2014. Commercial was up a scant 1.3 percent. Only two subsectors dropped year-to-year: power construction fell 6.7 percent, and the religious category was down 4.6 percent.
In the public sector alone, construction spending was 0.5 percent above July, and grew 7.0 percent compared to August 2014. Residential was up 3.5 percent on a monthly basis, and increased 32.9 percent on an annual basis. Nonresidential spending increased 0.4 percent over the previous month, and 6.5 percent from a year ago. In other segments, education was 0.2 percent lower, while highway construction dropped 0.4 percent, both on a monthly basis, while transportation spending increased 10 percent.
And in the private sector, spending was 0.7 percent better than July, and 16.5 percent higher than August 2014. The residential segment was up 1.3 percent compared to July, and was 16.1 percent above the same month of a year ago. Nonresidential construction climbed 0.2 percent over the previous month, and was 16.9 percent higher on an annual basis. Single-family spending grew 0.7 percent over July, and was 14 percent above August 2014. Multifamily spending was 4.8 percent and 24.7 percent higher on a monthly and yearly basis, respectively.
Nonresidential construction spending increased for the seventh straight month in August, Associated Builders and Contractors said, citing the U.S. Census Bureau's latest monthly report.
"Job growth is fueling both consumer spending and the absorption of space, all of this is good for construction spending," Anirban Basu, chief economist for the Associated Builders and Contractors, said. "While construction spending has expanded by more than 12 percent over the past year, that is not to suggest that macroeconomic risks do not abound. Interest rates are likely to head higher going forward and there is no guarantee that energy prices will remain subdued. While low energy prices have caused some regional economies to slow, investment and spending has been bolstered in others.
Eight of 16 nonresidential construction sectors expanded spending in August, compared to July, and all but two of these sectors posted gains on a yearly basis.
"Recently, much attention has been focused on the global economic slowdown and the volatility of financial markets," said Basu. "The Federal Reserve's recent decision not to increase interest rates supported a developing narrative which suggests that the weakness now apparent in much of the world will eventually bring the U.S. into another recession."