The headlines say construction spending was up and near expectations. Our view is that this does not consider inflation, and the trend lines clearly show a slowing sector.
There continues to be significant backward revision to the data - this month was slight and did not change the trends. The rolling averages declined. Also note that inflation is grabbing hold - and the inflation adjusted numbers are showing contraction in this sector.
The employment gains year-over-year are near the same than the year-over-yeargrowth in construction spending..
- Growth decelerated 1.2 % month-over-month and up 1.1 % year-over-year.
- Inflation adjusted construction spending down 3.3 % year-over-year.
- 3 month rolling average is 1.9 % above the rolling average one year ago which is a 0.9 % deceleration month-over-month. As the data is noisy (and has so much backward revision) - the moving averages likely are the best way to view construction spending.
- Backward revision for the last 3 months were mixed
- Up 0.3 % month-over-month and up 2.0 % year-over-year.
- Market expected from Bloomberg / Econoday -0.5 % to 0.5 % month-over-month (consensus +0.1) versus the +0.3 % reported
Construction spending (unadjusted data) was declining year-over-year for 48 straight months until November 2011. That was four years of headwinds for GDP.
This month's headline statement from US Census:
Construction spending during September 2017 was estimated at a seasonally adjusted annual rate of $1,219.5 billion, 0.3 percent (±1.3 percent)* above the revised August estimate of $1,216.0 billion. The September figure is 2.0 percent (±1.6 percent) above the September 2016 estimate of $1,195.6 billion. During the first 9 months of this year, construction spending amounted to $917.0 billion, 4.3 percent (±1.2 percent) above the $879.6 billion for the same period in 2016.
PRIVATE CONSTRUCTION - Spending on private construction was at a seasonally adjusted annual rate of $942.7 billion, 0.4 percent (±1.0 percent)* below the revised August estimate of $946.2 billion. Residential construction was at a seasonally adjusted annual rate of $515.4 billion in September, nearly the same as (±1.3 percent)* the revised August estimate of $515.6 billion. Nonresidential construction was at a seasonally adjusted annual rate of $427.3 billion in September, 0.8 percent (± 1.0 percent)* below the revised August estimate of $430.6 billion.
PUBLIC CONSTRUCTION - In September, the estimated seasonally adjusted annual rate of public construction spending was $276.8 billion, 2.6 percent (±2.3 percent) above the revised August estimate of $269.8 billion. Educational construction was at a seasonally adjusted annual rate of $71.9 billion, 5.2 percent (±2.8 percent) above the revised August estimate of $68.3 billion. Highway construction was at a seasonally adjusted annual rate of $84.3 billion, 1.1 percent (±5.6 percent)* above the revised August estimate of $83.4 billion.
Unadjusted Private Construction Spending Year-Over-Year (blue line) and Unadjusted PublicConstruction Spending Year-Over-Year (red line)
Private construction had been fueling construction growth.
Other Economic News this Week:
The Econintersect Economic Index for November 2017 returned to the range of normal growth after last months brief dip. Still, the economic fundamentals are somewhat chaoic. Six-month employment growth forecast is now indicating slowing growth.
Bankruptcies this Week from bankruptcydata.com: Privately-held M & G USA and 11 affiliated Debtors - including parent Luxembourg-based Mossi & Ghisolfi International S.a r.l., Armstrong Energy, Privately-held Bestwall
Please visit our landing page for a summary of all the analysis published over the past week.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.