The value of all U.S. construction put in place in July edged 0.1% higher to a seasonally adjusted annual rate of $1.3 trillion, even as the Commerce Department revised most June and May estimates lower. Total construction spending since the first of the year (not seasonally adjusted) is 5.2% higher than the first seven months of 2017.
“Higher labor and material costs continue to be a headwind, causing projects to be delayed as they no longer pencil out,” according to Wells Fargo analysis of July construction spending estimates. “We expect prices to ease in coming months and overall construction spending to be stronger in the second half of the year.”
Total residential spending increased 0.6% in July, however nearly all of the gain occurred in home improvement outlays, which rose 2.1%. Single and multifamily expenditures declined 0.3% and 0.4%, respectively.
Total nonresidential spending slipped 0.3% during the month. A 3.4% drop in value of commercial building construction and 0.7% slip in power construction helped push private nonresidential expenditures 1.0% lower (private nonresidential construction had been growing most of this year). Public nonresidential spending rose 0.7%, driven by 2.1% growth in educational construction that easily counterbalanced a 1.3% drop in transportation construction. Public spending on highways and streets increased 0.4%.
In contrast to the volatile monthly spending data, year-to-date totals show solid growth compared to 2017, lead by a 7.6% increase in the vast residential spending category, 3.6% growth in total highway and street spending and 4.9% more commercial building. Office construction is up 7.2% and building in the transportation sector has leapt 15.8% for the year.