US: Construction spending increased 0.1% in July - Nomura

Analysts at Nomura note that the US construction spending increased 0.1% m-o-m in July, below expectations (Consensus: 0.4%), while June spending was revised up to a 0.8% decline (previously reported 1.1% decline).

Key Quotes

“Although private residential home improvement spending rose strongly by 2.1% m-o-m, both private residential single and multifamily spending declined, by 0.3% and 0.4%, respectively.”

“Excluding residential improvement spending, total construction spending fell 0.3% m-o-m.”

“Residential construction data point to soft investment in residential construction in Q3, following weakness in previous quarters.”

“GDP tracking update: Private non-residential construction spending was somewhat weaker than we expected, implying less business structures investment in Q3. In addition, private residential construction spending was weaker than we expected and implies weak residential investment. However, state and local government construction spending was stronger than we expected, suggesting firmer growth in government spending.

Altogether, after rounding, our Q3 real GDP tracking estimate is unchanged at 3.2% q-o-q saar. Modest upward revisions to June construction spending raised our tracking estimate for the final release Q2 real GDP by 0.1pp to 4.3% q-o-q saar.”