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Construction Spending Unexpectedly Dives 0.7 Percent in August With Negative Revisions

Construction spending came in below the Bloomberg Econoday estimate for the 7th consecutive month. This one was a huge miss.
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Construction Spending 2022-08

Please consider the Census Bureau's Construction Spending report for August 2022.

Total Construction 

Construction spending during August 2022 was estimated at a seasonally adjusted annual rate of $1,781.3 billion, 0.7 percent (±1.0 percent) below the revised July estimate of $1,793.5 billion. The August figure is 8.5 percent (±1.6 percent) above the August 2021 estimate of $1,641.6 billion. During the first eight months of this year, construction spending amounted to $1,183.8 billion, 10.9 percent (±1.0 percent) above the $1,067.4 billion for the same period in 2021. 

Private Construction 

Spending on private construction was at a seasonally adjusted annual rate of $1,426.0 billion, 0.6 percent (±0.7 percent) below the revised July estimate of $1,435.2 billion. Residential construction was at a seasonally adjusted annual rate of $912.9 billion in August, 0.9 percent (±1.3 percent) below the revised July estimate of $921.6 billion. Nonresidential construction was at a seasonally adjusted annual rate of $513.1 billion in August, 0.1 percent (±0.7 percent) below the revised July estimate of $513.6 billion.

Public Construction 

In August, the estimated seasonally adjusted annual rate of public construction spending was $355.3 billion, 0.8 percent (±1.8 percent) below the revised July estimate of $358.3 billion. Educational construction was at a seasonally adjusted annual rate of $77.6 billion, 0.4 percent (±1.8 percent) below the revised July estimate of $78.0 billion. Highway construction was at a seasonally adjusted annual rate of $102.0 billion, 1.4 percent (±4.8 percent) below the revised July estimate of $103.4 billion.  

Margins of Error 

  • The margin of error for construction spending is (±1.0 percent). 
  • This contrasts sharply with the Census Bureau's margins of error on new home sales at (±18.3 percent). 

On September 27, I reported New Home Sales Jump an Astonishing 28 Percent in August

Color me more than a bit skeptical of that new home sales report.

To explain my skepticism, please see What Percentage of The August Blowout New Home Sales Will Never Close?

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Economists Expectations

The Bloomberg Econoday construction spending consensus was -0.1 percent vs. the report of -0.7 percent.

Given the Census Department revised July from -0.4 percent to -0.6 percent economists missed the mark badly. 

What About GGPNow?

On September 30, I noted GDPNow for the 3rd Quarter Surges Following Strong Trade, Inventory, and Income Reports

The GDPNow forecast blasted to 2.4 percent from 0.3 percent in the latest Atlanta Fed forecast.

I highly doubt GDPNow expects this result. And if not, a big chunk of that surge will be rolled back.

This post originated at MishTalk.Com

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