Economy Watch: Multifamily Gains in Mixed Bag for Construction Spending

The sector attracted a 13.9 percent year-over-year jump in August as spending also increased in most other asset categories.

New_Construction_Mid-City_NOLA_Feb_2015The Census Bureau reported on Monday that U.S. construction spending during August came in at an annualized rate of $1,142.2 billion, or 0.7 percent below the July total. The August 2016 figure is also 0.3 percent below the August 2015 total.

What’s dragging down the totals? There was a bit less private construction in August, 0.3 percent compared to the previous month. But more important, the rate of public construction spending in August was 2 percent below July. Year over year, public construction spending lagged even more, dropping 8.8 percent compared with August 2015. Private construction spending, by contrast, was up 3.3 percent year over year.

In the private sphere, construction spending was a mixed bag in August. Multifamily, which tends to be volatile, swung upward by 2.4 percent. Office construction was up 2.3 percent, and hotel construction gained 1.5 percent. Spending on single-family housing, manufacturing, and other commercial projects (including warehouses) all lost ground.

Still, compared with last year, most private construction spending gained ground, some spectacularly. Multifamily construction was up 13.9 percent compared with August 2015, while hotel construction advanced 17.7 percent. Spending on office construction turned in the largest year-over-year gain in the private sector: 28 percent. Spending on new manufacturing facilities, on the other hand, contracted 7.4 percent, as the sector suffered from the strength of the dollar and other woes.