Total U.S. construction spending continued to perform well in July, especially in the state and local sector. Census Bureau non-seasonally adjusted (NSA), constant dollar CPIP data showed that July’s twelve month total, (12MT) construction expenditures grew by 4.8% year on year (y/y), to $1271.7 billion (B). On a 12MT basis, private expenditures advanced 4.7% y/y, while, State & Local advanced by 5.3% y/y. Non-residential 12MT CPIP decreased by 0.1%, 12MT y/y to $572.2B.
Total Construction: Table 1 presents CPIP data for total construction for both 3 moving total and 12 month moving total y/y metrics. Momentum, defined as 3MT minus 12MT is also shown. Momentum provides market direction with green indicating stronger activity and red indicating slowing activity. Private construction accounted for 72.3% of the total three months expenditures ending in July. State & local spending accounted for 26.1%, the remaining 1.6% was for federally financed projects. The private sector posted 5.2% and 4.7% growth for 3MT and 12MT y/y comparisons resulting in positive 0.6% momentum for the month of July.
Single family residential construction recorded 10.0% growth on a 3MT basis and 10.5% growth on a 12MT basis. Nationally there is a significant demand for single family residential homes causing construction to increase. A strong job market, low interest rates and pent-up demand is driving demand. This trend is expected to continue throughout 2018.
On a 3MT basis, State and Local total construction recorded a 12.8% increase in spending. This was the eighth month in a row of positive growth on a 3MT y/y basis, and the strongest historical y/y growth rate.
Non-residential Construction: Table 2 shows the breakdown of non-residential construction (NRC). The overall growth rate was 0.5% on a 3MT y/y basis and 0.1% on a 12MT y/y comparison resulting in a upward 0.4% momentum.
The growth rate of private NRC was -3.5% for the 3MT ending July, and the rolling 12MT value was -2.1%, leading to a negative momentum score of -1.4%. State and local expenditures were positive for both 3MT and 12MT metrics. The 3MT y/y increase was +12.1%, stronger than the 6.8%, 12MT y/y growth giving rise to positive momentum of +5.3%. July’s positive percentage posting marks eleventh consecutive months of growth on 3MT y/y basis and ten months in a row of positive percentage growth on a 12MT y/y comparison.
Sectors that are recording contracting expenditures on both rolling 3MT and 12MT y/y comparisons, include: commercial, lodging, and public safety. Overall the construction industry had a solid performance for the month of July, with significant growth on the State and Local level.
At Gerdau we monitor the CPIP numbers every month to keep you, our customers informed on the health of the U.S. construction market.