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Little Change In June Construction Spending08-13-15 | News

Little Change In June Construction Spending
But 12 Percent Gain Year-to-Year

The June construction spending report shows virtually no change on a monthly basis, but a great deal of difference in the annual results. Nearly all subsectors posted gains for the year, some of them in the double digits.

Spending on construction projects was virtually unchanged in June, compared to May, but is 12 percent higher on a year-to-year basis, U.S. Census Bureau data shows.

The monthly figure is the highest annual growth rate since 2006, the Associated General Contractors of America said. AGC officials cautioned, however, that the spending gains could be for naught until steps are taken to upgrade the construction workforce.

"Spending rose strongly in June from a year ago for all major construction categories "?u private nonresidential, residential and public," said Ken Simonson, the association's chief economist. "Although the initial estimate for June showed minimal growth from May, totals for May and April were revised upward by large amounts."

Private and public sources combined to spend $1,064.6 billion on both residential and nonresidential construction projects in June. That compares to $1,063.5 billion in May, and $950.3 billion in June 2014.

Residential construction, which includes both single-family homes and multi-family projects, was a mere 0.4 percent higher compared to May, but 13 percent greater year-to-year.

And while there was zero change in the nonresidential sector on a monthly basis, it managed to grow 11.5 percent compared to June 2014.

Of 16 subsectors, manufacturing realized the largest annual gain, a whopping 62.1 percent.

"Despite the lack of growth on a monthly basis in June, along with the overall economy's lukewarm growth, most contractors are markedly busier than they were a year ago," Anirban Basu, chief economist for the Associated Builders and Contractors, said.

"May's nonresidential construction figure was revised upward by 2.6 percent and April's by 1.4 percent. Therefore, it is conceivable that June's estimate will eventually be revised higher as well."

Seven of the 16 nonresidential subsectors posted gains in June: lodging, 3.9 percent; water supply, 12.2 percent; highways and streets, 1.3 percent; amusement and recreation, 10.2 percent; transportation, 2.3 percent; sewage and waste disposal 1.6 percent; and public safety, 2.5 percent.

The nonresidential sectors that fell in June: education, - 0.2 percent; power, - 0.9 percent; commercial, - 4.3 percent; health care, - 0.9 percent; manufacturing - 0.8 percent; offices, - 1.1 percent; conservation and development, - 5.8 percent; religious, - 6.2 percent.

But 14 of the 16 subsectors grew on a year-to-year basis, led by manufacturing. Others with annual gains include: Lodging, 42.2 percent; water supply, 12 percent; highways and streets, 14.8 percent; amusement and recreation, 39.2; communications, 13.4 percent; transportation, 9.6 percent; sewage and waste disposal, 5.3 percent; offices, 24.4 percent; commercial, 7.6 percent; health care, 6.3 percent; educational, 2.1 percent; religious, 2.1 percent; conservation and development, 6.5 percent.

Only two subsectors fell in their year-to-year comparisons: public safety, -3.1 percent; and power, -16.5 percent. The National Association of Home Builders said recent data show spending on multi-family projects is driving the total increase in the residential construction sector.

On a month-to-month basis, private multi-family spending was at $52 billion, up 2.82 percent from May, while private single-family spending was $211 billion, a slight decline of 0.27 percent.

The pace of the multifamily spending is slowing, however, and the NAHB predicts construction of single-family homes will overtake multi-family housing later in 2015.