Total construction spending jumped in August but any optimism from the fresh data was offset by downward revisions to the prior month.
The construction sector improved by 0.8% in August, in contrast to expectations that it would fall 0.1%. But spending in July fell by a whopping 1.1% in the new estimates, compared to the original projection of -0.2%.
What’s really going on in the market can’t be seen in the headline alone. The main trend is that residential housing is heading upwards, including a 4.7% gain in August. But non-residential and government construction on weighing heavily on the index. Non-residential activity slipped 0.1% in August, while and public spending fell 1.1%.
Compared to last year, total spending is down 11.6%.
The data suggests “the drag on GDP growth from residential investment ended in the third quarter, although it appears that spending on nonresidential structures will be a larger drag in the third quarter than in the second,” said economists at RDQ.