by Mish

The Econoday Consensus was for construction spending to rise 0.5%. Instead, spending fell a sharp 1.4%.

Highlights
Volatility once again hits the construction spending report where an unexpected sharp decline in April, at minus 1.4 percent, is offset by a giant upward revision to March which now stands at plus 1.1 percent vs an initial 0.2 percent dip.
The residential side of the report, at minus 0.7 percent in April, shows the first decline in 7 months, pulled lower by a sharp drop in residential improvements and spending on new condos that offset a solid 0.8 percent gain for new single-family homes.
The non-residential side shows a 0.6 percent decline for private building, hit by contraction for factories and power plants, and a 2.0 percent dip for public building with both highways and education lower.
This report is yet another bad result for April as the upward revision to March pulled spending out of the second quarter and into the first. And it’s the second quarter that is in focus right now and housing, including sales and starts and now construction, have all been disappointing.

Revisions Impact on GDP

Compared to last month revisions are not as big. February construction spending rose 0.1 percentage points from the number posted last month. March was a huge revision, however, up 1.3 percentage points vs the prior report.

The March revision will have a small upward impact on first quarter GDP. I estimate 0.1 to 0.2 percentage points.

Economic Mysteries

  1. Why massive construction spending revisions are the norm is a mystery.
  2. Why economists thought construction spending would jump this month is an even bigger mystery.

On May 23, I posted New Home Sales Contract 11.4%: Sales Barely Up Year-Over-Year.

Somehow, economists could not foresee a decline in construction spending even though new home sales collapsed 11.4%.

Mike “Mish” Shedlock

Construction Spending Jumps (From Huge Revisions)

The construction spending report from the Census Bureau is the biggest crapshoot in the entire lost of government reports.

March Construction Spending Unexpectedly Declined by 0.9%

Construction spending declined 0.9% in March and revisions in February were negative.

Construction Spending Declines 1.7% but Strong Upward Revisions in Jan and Feb

The often volatile and heavily revised construction spending numbers did their thing again in March.

Investigating Weather-Related Effects on Construction Spending

Reported construction spending for March (yes we are still looking at first quarter data), was -0.2%.

Construction Spending Accelerates

Construction spending rose more than expected in November. Revisions add to the gains.

Construction Spending Disaster: Expectations Missed, Negative Revisions for 2018

Economists expected construction spending in May to rise 0.6%. Spending rose 0.4%. April was revised 0.9% lower.

Construction Spending Flop: Only Public Spending Prevents Outright Disaster

The Econoday consensus expected a bounce in May construction spending but the only bounce was an April revision from -1.4% to -0.7%. May was flat vs an expected bounce of 0.5%.

Construction Spending Unexpectedly Declines One Percent

Construction spending took an unexpected dive of 1% today vs. an Econoday expectation of +0.5%.

Construction Spending Dips Slightly in July

Construction spending declined 0.1% in July. With major revisions being the norm, consider it flat.