FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.

posted on 01 October 2015

August 2015 Construction Spending Growth Is Again Strong.

Written by Steven Hansen

The headlines say construction spending grew. The backward revisions make this series very wacky - but the backward revisions this month were downward making the data worse than the headline view. In any event, construction spending is growing much faster than the economy in general.

Econintersect analysis:

  • Growth accelerated 0.4 % month-over-month and Up 13.7 % year-over-year.
  • Inflation adjusted construction spending up 11.9 % year-over-year.
  • 3 month rolling average is 13.4 % above the rolling average one year ago, and up 1.1 % 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.

Unadjusted Construction Spending - Three Month Rolling Average Compared to the Rolling Average One Year Ago

last month:

current month with backward revision

US Census Analysis:

  • Up 0.7 % month-over-month and Up 13.7 % year-over-year (versus the reported 12.0 % year-over-year growth last month).
  • Market expected 0.2 % to 0.8 % month-over-month (consensus +0.7) versus the +0.7 % reported

Construction spending (unadjusted data) was declining year-over-year for 48 straight months until November 2011. That was almost four years of headwinds for GDP.

Indexed and Seasonally Adjusted Total Construction Spending (blue line) and Inflation Adjusted (red line)

This month's headline statement from US Census:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during August 2015 was estimated at a seasonally adjusted annual rate of $1,086.2 billion, 0.7 percent (±1.5%)* above the revised July estimate of $1,079.1 billion. The August figure is 13.7 percent (±2.1%) above the August 2014 estimate of $955.0 billion. During the first 8 months of this year, construction spending amounted to $683.4 billion, 9.8 percent (±1.3%) above the $622.4 billion for the same period in 2014.

PRIVATE CONSTRUCTION - Spending on private construction was at a seasonally adjusted annual rate of $788.0 billion, 0.7 percent (±0.7%)* above the revised July estimate of $782.3 billion. Residential construction was at a seasonally adjusted annual rate of $383.3 billion in August, 1.3 percent (±1.3%)* above the revised July estimate of $378.5 billion. Nonresidential construction was at a seasonally adjusted annual rate of $404.7 billion in August, 0.2 percent (±0.7%)* above the revised July estimate of $403.8 billion

PUBLIC CONSTRUCTION - In August, the estimated seasonally adjusted annual rate of public construction spending was $298.2 billion, 0.5 percent (±2.6%)* above the revised July estimate of $296.8 billion. Educational construction was at a seasonally adjusted annual rate of $67.4 billion, 0.2 percent (±4.1%)* below the revised July estimate of $67.5 billion. Highway construction was at a seasonally adjusted annual rate of $90.4 billion, 0.4 percent (±6.4%)* below the revised July estimate of $90.7 billion

Unadjusted Total Construction Spending Year-Over-Year (blue line) and Month-over-Month (red line) Change

Unadjusted Private Construction Spending Year-Over-Year (blue line) and Month-over-Month (red line) Change

Unadjusted Public Construction Spending Year-Over-Year (blue line) and Month-over-Month (red line) Change

Private construction had been fueling construction growth.

Public construction is expanding 7.0 % year-over-year - all numbers are unadjusted. Private construction is up 16.5 % year-over-year - all numbers are unadjusted.

Caveats on the Use of Construction Spending Data

Although the data in this series is revised for several months after issuing, the revision is generally minor. This series is produced by sampling - and the methodology varies by sector being sampled.

The headline data is seasonally adjusted. Econintersect uses the raw unadjusted data.Econintersect determines the month-over-month change by subtracting the current month's year-over-year change from the previous month's year-over-year change. This is the best of the bad options available to determine month-over-month trends - as the preferred methodology would be to use multi-year data (but the New Normal effects and the Great Recession distort historical data).

The data set for construction spending is not inflation adjusted. Econintersect adjusts using the BLS Producers Price Index - subindex New Construction (PCUBNEW-BNEW). However in the inflation adjusted graph in this post, FRED does not have this series - andEconintersect has used Producer Price Index: Finished Goods Less Energy (PPIFLE), Monthly, Seasonally Adjusted which has similar characteristics.

Construction (which historically is an major economic driver) is a literal shadow of its former self. Its contribution to GDP is down $400 billion from its peak level in 2006. The main driver of construction spending is the private sector. Here is the historical breakdown. The graph below uses US Census seasonally adjusted data.

Obvious from the above graph that public spending on construction is falling off, while private spending is slightly trending up. The overall effect is that construction spending is near the same place it was in early 2010.

Related Posts:

Old Analysis Blog

New Analysis Blog

All Construction Spending Articles All Construction Spending Articles

>>>>> Scroll down to view and make comments <<<<<<

Permanent link to most recent post on this topic

Click here for Historical Releases Listing

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.

You can also comment using Facebook directly using he comment block below.

Econintersect Economic Releases


Print this page or create a PDF file of this page
Print Friendly and PDF

The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.

Take a look at what is going on inside of
Main Home
Analysis Blog
A Short Note on a Connection Between Marginalist Economics and Folk Medicine
Run A High Pressure Economy? Janet Yellen Does Not Understand the Problem
News Blog
What We Read Today 28 October 2016
Ten Ways To Live A Happier Life According To Animals
21 October 2016: ECRI's WLI Growth Index Again Declines
Advance Estimate 3Q2016 GDP Quarter-over-Quarter Growth at 2.9 Percent.
Rail Week Ending 22 October 2016 Better Than The Previous Week
What Happens After The Islamic State Loses Mosul
Infographic Of The Day: The History Of Women's Ice Hockey In Canada
Early Headlines: Asia Stocks Mixed, Huge Antarctic Marine Park, Can Trump Get To 270?, US Workers Gaining, UK Inflation, France GDP, India Savings Lag And More
Why Amazon Gives So Many Perks To Prime Members
Where Workplace Trust Is Strongest
How A Lack Of Sleep Affects Your Brain - And Personality
How Accurate Are Final US Election Polls
What We Read Today 27 October 2016
Investing Blog
Technical Thoughts: Looking For The Rebounds
Gold That Pays Dividends
Opinion Blog
Global Debt Investors: The Silence Of The Lambs
A Hard Brexit And Reduced Migration Won't Benefit UK Workers
Precious Metals Blog
Inflation Surging As Platinum Signals Stock Market Decline
Live Markets
28Oct2016 Market Close: US Stock Markets Close Fractionally Lower After FBI Opens Probe Into Hillary's Emails Over Shadows Positive GDP Report, Indicators Fractionally Bearish
Amazon Books & More

.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Middle East / Africa
USA Government

Crowdfunding ....



Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved