Nominal value of US construction spending reached a seasonally adjusted USD 1, 133.5 billion in June, declining 0.6 percent in the month, the third straight month of decline. This is a huge miss as compared to the consensus expectations of a rise of 0.5 percent. The headline figure has been missing the consensus expectations for three consecutive months. Construction outlays in the month of April were anticipated to have risen 0.6 percent, while the initial print had indicated that the activity dropped 1.8 percent.
The construction report for June actually showed that the outlays in April dropped 2.9 percent. Also, expenditures dropped 0.1 percent in May, slightly better than the original print. The divergence raises the doubts whether the weakness seen is because of volatility or at a turning point and forecasters are missing the hint, stated Wells Fargo in a research report.
Delving into the construction data by sector, private residential construction dropped 0.6 percent in June, thanks to private non-residential, and a 0.6 percent decline in public spending. Private residential came in flat in June on back on rise in home improvement. However, keeping aside private residential data, the overall report was quite dull.
The three-month annualized rate for private non-residential construction has dropped and implies that there is a downward shift. Moreover, the trend in private single-family is soft too. Private non-residential construction spending declined 1.3 percent in the month with manufacturing negatively contributing 0.8 percentage points from the headline.
Transportation equipment dropped 10.9 percent in the month and is 5.9 percent below the same month’s level a year ago. The US Bureau of Economic Analysis has stated that structure investment dropped at an annualized pace of 7.9 percent in the second quarter.
