Those expecting GDP growth will be up and away following the second-quarter bounce may wish to reconsider. If anything, today’s reports offer a strong hint that second quarter GDP was not as good as reported.

The commerce department reports Construction Spending in June fell 1.3% vs an Econoday consensus of a 0.5% gain. As a small consolation, the Commerce Department revised May spending from +0.0% to +0.3%.

Total Construction

Construction spending during June 2017 was estimated at a seasonally adjusted annual rate of $1,205.8 billion, 1.3 percent below the revised May estimate of $1,221.6 billion. During the first 6 months of this year, construction spending amounted to $577.0 billion, 4.8 percent above the $550.5 billion for the same period in 2016.

Private Construction

Spending on private construction was at a seasonally adjusted annual rate of $940.7 billion, 0.1 percent below the revised May estimate of $941.3 billion. Residential construction was at a seasonally adjusted annual rate of $502.9 billion in June, 0.2 percent below the revised May estimate of $504.0 billion. Nonresidential construction was at a seasonally adjusted annual rate of $437.8 billion in June, 0.1 percent above the revised May estimate of $437.3 billion.

Public Construction

In June, the estimated seasonally adjusted annual rate of public construction spending was $265.1 billion, 5.4 percent below the revised May estimate of $280.3 billion. Educational construction was at a seasonally adjusted annual rate of $67.5 billion, 5.5 percent below the revised May estimate of $71.4 billion. Highway construction was at a seasonally adjusted annual rate of $82.4 billion, 6.6 percent below the revised May estimate of $88.2 billion.

Construction Spending Residential and Nonresidential

Construction spending in the first half of the year shows improvement over 2016, but all of that took place in the first quarter.

Residential construction is far below the 2006 peak. Overbuilding of commercial construction kept employment strong.

Mike “Mish” Shedlock