Construction spending declined in July

Summary

High rates suppressing construction

The elevated interest rate environment continues to exert pressure on construction. Total construction spending fell 0.1% in July, amounting to a 2.8% year-over-year decline.

Residential spending increased modestly during the month, largely on account of a slight upturn in single-family outlays. Since the spending data do not account for material and labor price changes, it is too soon to say that the recent downdraft in single-family activity has bottomed. Rather, weakening permit activity and low builder sentiment suggests single-family construction is still trending lower against a backdrop of stagnant new home sales and elevated inventories in key builder markets.

Meanwhile, nonresidential spending continues to fall, with July's monthly decline bringing outlays to 1.1% below the year-ago level. Although there are pockets of strength in the infrastructure, institutional and data center categories, commercial development remains under significant pressure from high financing costs.

Download the Full Report!