Economy Watch: Construction Spending Edges Up, No Thanks to Sequestration
Construction spending saw an uptick of 0.6 percent in July compared with June, according to the Census Bureau.
By Dees Stribling, Contributing Editor
Construction spending saw an uptick of 0.6 percent in July compared with June, according to the Census Bureau on Tuesday. The annualized rate in July was $900.8 billion, compared with $895.7 billion in June. The July 2013 rate is 5.2 percent higher than in July 2012.
The monthly increase was entirely because of private construction projects. Private construction spending was at annualized rate of $631.4 billion in July, or 0.9 percent higher than in June. By contrast, construction spending by public entities, most notably the federal government, is in the vise grip of sequestration: public spending was down 0.3 percent for the month, the bureau noted.
Compared with last year, public spending is also down: 4 percent lower than in June 2012. Private construction, on the other hand, has increased on an annual basis, especially because of private residential construction spending, which is up 25 percent year-over-year. Non-residential construction spending was up only slightly since last year.
Another day, another report of increasing home prices
In yet another indication of the recovery of U.S. housing—but will they last through the rest of the year? —CoreLogic reported on Tuesday that home prices nationwide, including distressed sales, increased 12.4 percent in July 2013 compared with a year ago. On a month-over-month basis, including distressed sales, home prices increased by 1.8 percent in July 2013 compared to the previous month.
Take distressed sales out of the equation, and home prices increased almost as much: 11.4 percent year-over-year in July 2013. Month-over-month, excluding distressed sales, home prices increased 1.7 percent in July 2013 compared to June. Distressed sales aren’t the market-crippling factor that they used to be, in other words. By CoreLogic’s calculations, distressed sales include both short sales and REO transactions.
The company predicts that home values will indeed continue to rise in the coming months, but not as fast. “Home prices continued to surge in July,” Mark Fleming, chief economist for CoreLogic, noted in a press statement. “Looking ahead to the second half of the year, price growth is expected to slow as seasonal demand wanes and higher mortgage rates have a marginal impact on home purchase demand.”
Manufacturing expands in August
The U.S. manufacturing sector expanded in August for the third consecutive month, and the overall economy grew for the 51st consecutive month, according to the latest Manufacturing ISM Report On Business, which was released on Tuesday. The Purchasing Managers Index came in at 55.7 percent, an increase of 0.3 percentage points from July. In fact, the August reading is the highest of the year so far.
War or no war, Wall Street was mildly optimistic on Tuesday, with the Dow Jones Industrial Average up by 23.65 points, or 0.16 percent. The S&P 500 was up 0.42 percent and the Nasdaq advanced 0.63 percent.