Dive Brief:
- Construction spending fell 0.7% in August to a seasonally adjusted annual rate of $1.142 trillion, below the down-revised rate of $1.151 trillion in July, the Commerce Department reported Monday.
- Private nonresidential construction slipped 0.4% in August, and private residential construction spending dropped 0.3%. Within residential, single-family spending was down 0.9%, while multifamily was up 2.4%. Public construction spending tumbled 2.0% in August.
- Although August's construction spending figure was 0.3% below August 2015, spending in the first eight months of 2016 was still 4.9% higher than the same period last year.
Dive Insight:
August's construction spending figure represents the lowest spending level in eight months and the second-consecutive month of declines. The drop came as a surprise, as experts had predicted the figure would rebound in the coming months amid an environment of low interest rates and a strengthening economy.
The 0.9% drop in private residential construction spending coincided with reports last month of a dip in new residential activity. The Commerce Department reported that housing starts fell 5.8% in August to a seasonally adjusted annual rate of 1.142 million. Factors contributing to that decline include a shortage of lots and labor, as well as costly regulations.
Falling public construction spending is a familiar story, as the sector has seen a continuous slide. Industry groups have called on government at all levels to boost public funding to build and repair necessary infrastructure, but broad initiatives to fund large-scale projects are often stalled by political infighting or a lack of resources.
For all of the latest construction industry data, check out our Industry Pulse page here.
