Spending on Construction Across U.S. Unexpectedly Down in August

Spending on Construction Across U.S downSummer may be a traditionally busy time in the construction industry, but this August turned disappointing for many building professionals. Based in part of positive trends in U.S. construction spending, economists polled by Reuters had predicted a 0.5 percent spending increase for August. Considering July saw a spending uptick of 1.2 percent, the forecast seemed reasonably conservative.

Modest as it was, however, it never came to pass. For August 2014, the United States Department of Commerce reported an overall spending decrease of 0.8 percent. Worse yet, it was the second decline within a period of three months. The growth seen in July isn’t enough to counteract the effects of these recent downturns.

Minor Declines in Residential Building

All sectors were hit by the spending decline, but some clearly suffered greater losses than others. Residential construction held relatively stable, with a decline of 0.1 percent caused by fewer homeowners hiring contractors for remodeling work.

A loss here was somewhat predictable considering the 5.3 percent drop in residential construction in the year’s first quarter. This decline in the construction industry was, in fact, significant enough to affect the overall economy.

Even so, the 8.8 percent construction spending increase in the second quarter demonstrates the ongoing recovery in the housing market, and August’s dip in spending is unlikely to disrupt that.

Greater Declines in Nonresidential Building

U.S. construction spending on private nonresidential construction fell by 1.4 percent, weighing heavily on the industry’s spending total. Fewer shopping centers, office complexes and private hospitals were built.

Weaker public spending also brought the total down. Thanks largely to government budget restrictions, the amount invested in state and local construction fell 0.9 percent in August, while spending on federal projects took a 1.9 percent hit.

The news isn’t all bleak, though. U.S construction spending may have faltered in recent months, but it’s still 5 percent higher than in August 2013, indicating an overall trend toward recovery.

To learn more about today’s construction market trends, contact Construction Monitor.

Image via Shutterstock.com

Leave a Comment

Your email address will not be published. Required fields are marked *