Highlights
Construction spending fell 1.2 percent in July, following a 0.4 percent gain in June. July's decrease was well below the consensus expectation of no change in construction spending in July. July's drop in construction outlays was the largest decline since the 1.3 percent decline in August 2001. In July, private construction fell 1.3 percent while public construction dipped 0.7 percent. Private residential construction dropped 2.0 percent with single-family homes down 3.0 percent, following a 2.4 percent decrease in June. Private residential outlays are down 3.0 percent on a year-on-year basis.

Nonresidential construction spending rose 0.3 percent in July, following a 3.7 percent jump in June. Monthly nonresidential outlays for July were up in: office, up 5.5 percent; power, up 2.8 percent; and transportation, up 2.0 percent. Declines were seen in commercial, down 0.1 percent, and in manufacturing, down 3.1 percent. Nonnresidential outlays are up 22.0 percent from a year ago.

Today's report is consistent with the weakening in housing starts pulling down residential construction and with healthy corporate profits boosting nonresidential construction. July's construction outlays point to a decline in residential investment in third quarter GDP but also to a rise in nonresidential investment. These numbers point to the almost standard economic forecast for moderating GDP growth in coming quarters with housing a negative and business construction a positive. Look for strength in stocks in commercial construction and softness for those reliant upon housing.

2006 Release Schedule

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