The 0.5% August U.S. construction spending rise
The 0.5% August U.S. construction spending rise after upward revisions beat estimates. Analysts saw August gains and prior upward revisions for both residential and nonresidential construction, with strength in new construction as well as the home improvement residual despite the disruption effect analysts expected from Harvey for new construction. Public construction undershot assumptions however, and downward revisions left a new cyclical-bottom in July. Construction spending has weakened since April despite revisions, thanks to a downward ratcheting in public construction, a drop-back in nonresidential construction since January, weakness in new residential construction led by the multi-family sector that trimmed a prior steep climb, and a surge in the home improvement residual that started in Q1 of 2016. Analysts still expect Q3 GDP growth of 3.0%. Analysts expect a 2% (was 3%) contraction rate for residential construction after a 7.3% Q2 drop, a 4% (was flat) growth rate for nonresidential construction after a 7.0% Q2 clip, and a 1.5% (was 1.8%) Q3 clip for government purchases after a 0.2% Q2 contraction rate.