Construction spending month-over-month declined 0.6% vs an expected gain of 0.6% in a Bloomberg Consensus Range of 0.2% to 2.2%. Spending is on the verge of negativity year-over-year.
Revisions are all over the place. May was revised up by 0.7 percentage points but April lower by 0.9 percentage points.
Construction spending has to show the strength based on other data including housing starts and permits. Spending fell 0.6 percent in June vs expectations for a 0.6 percent gain. Revisions are mixed with May revised upward from a 0.8 percent drop to a decline of only 0.1 percent but April revised from minus 2.0 percent to a drop of 2.9 percent.
Spending on single-family construction fell 0.4 percent in June to extend a surprisingly negative streak that goes back to March. Year-on-year, construction spending on single-family homes is up only 4.8 percent vs a 16.4 gain for multi-family units where monthly data for June, however, also show contraction, at minus 1.5 percent. A plus for housing data in this report is strength in home improvements as residential spending excluding new homes rose 1.2 percent in the month.
Non-housing is also soft in the report, down 1.3 percent for private non-residential spending which is up only 2.5 percent year-on-year. Manufacturing is showing the most weakness, down 4.5 percent in the month with the on-year rate down 10.4 percent to underscore stubborn weakness in business investment. Public spending is also soft with education down 0.5 percent and highways & streets down 1.4 percent.
Overall construction spending is up only 0.3 percent year-on-year to deepen what is a declining trend. These results will weigh on the expectations for the first revision to second-quarter GDP which came in at a very soft plus 1.2 percent in last week’s initial estimate. But there’s definitely upward pressure building in other housing data, pressure that points to eventual strength in construction spending.
Construction spending is expected to bounce back in June, up a consensus 0.6 percent following steep declines in the two prior months of minus 0.8 percent and minus 2.0 percent. Construction spending on non-housing has been soft but spending on housing has been steadily climbing. Recent strength in housing starts is a positive indication for this report.
Bloomberg Econoday Quote of the Day
Positive Indications Fall Flat
Diving into the the Census report on Construction Spending we see ….
- Residential construction was down 0.1% for the month.
- Nonresidential construction was down 1.0% for the month.
- New private single-family construction was down 0.4% for the month.
- New private multi-family construction was down 1.5% for the month.
So much for the idea that “Recent strength in housing starts is a positive indication for this report.”
Year-over-year numbers are much better …
- Total private year-over-year +2.5%
- Residential year-over-year private +2.6%
- Residential year-over-year single-family +4.8%
- Residential year-over-year multi-family +16.4%
Yet, year-over-year total construction spending is only up 0.3%.
Public construction influenced the overall number, down 6% year-over-year. Schools (-4.8%), street and highway (-5.8%), transportation (-5.1%), and sewage (-15%), and water supply (-11.7%) were the primary downside contributors.
Eight Miles High
Byrds Musical Tribute
This post would not have been complete without a musical tribute.
Second Quarter GDP
Construction spending will lower the second estimate of second quarter GDP.
For more details on second quarter GDP please see …
- 2nd Quarter Real GDP 1.2%, 1st Quarter Revised Lower to +0.8%; Bloomberg Spins This Mess Positive
- GDP Revisions 2013-2015 by Quarter
Mike “Mish” Shedlock
Need-more-bridges. Let’s build one two thousand miles wide and stretching from NY to SF.
Al Dente said:
So everyone in between can live under a bridge! This is where we’re going anyway.
I wish to get your opinion as to how, or the possible sequence of end games to this bubble economy.
I mean, Fed, ECB, and JCB (Japan Central Banks) all print trillions of $$ to keep bubble inflated. They all use the common them of Boiling Frogs, and this has escaped the general & ignorant public. 1st with QE with promised to buy only Top quality federal government bonds for a small duration of time at a small $$ amount as a “temporary help”, then come the extension to all Corporate Bonds and including junks (ECB doing now), and finally fully embrace all stocks and possibly everything perpetually and infinite $$ (JCB buying stocks now).
The key here, Boiling Frogs idea and ignorant public that allow these kinds of BS keep going. No debt is too much. Never need to enforce account balance of Debt VS Assets or Cash Flows. Government + Junk Corporate need more $$, Central Banks prints and buy, people happy to look other way and party on.
My question is, are there any historical times that match we have seen here? More importantly, are there any measurements that would trigger the avalanche of shxt-storms in stock market and economy? I just cannot believe this bubble prosperity keep going perpetually. But then again, we have been wrong for 8 years and running, where no bubble asset ever get reset.
Maybe Pater Tenebrarum can shed a light? In the matter of a country of non-reserve-currency like Thailand, if it prints too much local currency, the money would fled and Thai Baht would plunge, i.e. natural force of enforcing balance in the economy. But when reserve currency like Yen, USD, Euro, etc were printed in unlimited supply, WHAT would Enforce the Balance?
I will comment on your question in a post later today
Stuki Moi said:
If “zoning laws,” and other wet dreams of feeble, totalitarian and well indoctrinated minds, allowed those who happened to own cars, to prevent anyone else from buying any; it would take a rapidly ever increasing amount of fresh print and debt slavery to keep the auto industry expanding as well……..
I’m in the construction industry in Michigan. We are having another great year, and spruce pine fir prices are up about $100/M since January. A personal, non-scientific observation in my part of Michigan; it’s been years since I’ve seen so much construction activity. How long will it last? Who knows, but as of now, it’s shaping up to be another record year.
Not just the Greater New York City region but the entire USA is the site of the biggest construction boom in World History. The only one that even comes close is last one the USA had. Public transportation, nuclear power plants, shortfalls, 800 sq ft apartments being called “townhouses” and rented out for $3500 a month…there is no end in site that any normal person could see…obviously no one believes the Fed will ever raise rates because “the you know who” are in charge of the money.
Obviously the stock market is signalling a recession dead ahead of course.
Right up there with “Banks pull back on lending” or “the War effort is winding down.”