Construction spending, up 0.8% in February, was a bit weaker than the Bloomberg Econoday Consensus estimate of 1.0%.
However, the Census Department revised January from -1.0% to -0.4% so the report was a bit stronger than it appears on the surface.
Construction strength is not uniform.
Total Construction Spending in Millions of Dollars
Total Construction Spending Percent Change From Year Ago
Year-over-year residential construction spending is up 6.16% but nonresidential construction is up only 0.95%.
Construction Spending by Type
Multi-family residential is doing much better than single-family. The latter is more important as it hints at family formation.
Commercial Spending
Commercial spending is a strong indicator of future hiring.
As long as Walmart, Target, McDonalds, etc. keep building stores, the economy is likely to keep adding jobs. Nonetheless, spending is still below pre-recession levels.
Also, growth in online spending is crushing store spending and minimum wage hikes have taken a bite out of profits as well.
How much longer the commercial buildout can keep rolling on remains a key question.
Finally, these construction spending reports are very volatile and subject to huge revisions. So take all these numbers with a huge dose of skepticism.
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Mike “Mish” Shedlock
yeah thats just the ticket,more fast food joints,walmarts and dolla stores and of course the brand new gov’t offices and penitentiaries ,fast food joint and dolla store and pawn shops on every corner,and you wonder why everybody so fat
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“However, the Census Department revised January from -1.0% to -0.4% so the report was a bit stronger than it appears on the surface.”
…
What January revision giveth … December revision taketh.
Last report … numbers are SAAR
December … $1.192150 trillion
January … $1.180333 trillion
This report
December … $1.188941 trillion
January … $1.183840 trillion
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You always look beneath the surface, Tony. They can’t get anything past you!
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Seems like they need a correction to 4th quarter GDP – Alas, the “Final” is in.
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Total Construction Spending should be viewed with both population and CPI adjustment shown. If this was done everyone could easily see that no progress has been made over the last 15 years from 2002, which was also a mediocre year.
From the St Louis FRED:
-Population, 1/2002 286 million, 4/2017 325 million
-CPI, 1/2002 177, 2/2017 244
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“Multi-family residential is doing much better than single-family. The latter is more important as it hints at family formation.”
Where are the family formation numbers? Plus Millennials would need to be suddenly flush with spending power to be home buyers rather than renters. Home foreclosures, rental shortages and speculative building ahead of rising interest rates are more likely.
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