Dive Brief:
- Construction spending slipped 0.4% in November to a seasonally adjusted annual rate of $1.12 trillion — the first decline since June 2014, the Commerce Department reported Monday.
- Nonresidential construction declined 0.7%, offsetting a 0.3% gain in residential construction. Within residential, single-family home construction increased 0.6%, and multifamily fell 0.7%.
- November's results came in below expectations, as economists polled by Reuters had predicted spending would rise 0.6%. October's spending rate was also revised down in the Commerce Department report, from a 1.0% gain to a 0.3% rise.
Dive Insight:
Along with the disappointing November spending results, the Commerce Department also revised construction data between January 2005 and October 2015 due to a "processing error in the tabulation of data," according to Reuters.
According to ABC Chief Economist Anirban Basu, the revisions lowered the residential spending estimates for 2012 and 2013 and raised the estimates for 2014 and 2015. "This means that the construction spending recovery of the past two years was actually better than previously thought," he told Construction Dive. "The interpretation of nonresidential construction spending data is unaltered."
The National Association of Home Builders' Eye on Housing blog noted that the revision "places the data series in greater alignment with other measures of the remodeling market."
The rise in single-family construction spending and decline in multifamily wasn't a surprise, as economists have predicted a slowdown in apartment construction for months.
"While it is rarely a good idea to place too much emphasis on one month of data, there are some ominous indications in today’s report," Basu said in a release. "After experiencing significant spending momentum early last year, that momentum has softened considerably in recent months."
Before November's slip, construction spending had been steadily increasing for 11 straight months. Still, despite the less-than-ideal start to 2016 construction reports, industry experts have expressed they are mostly optimistic about the year ahead.
