Data released today showed that Construction spending rose 0.1% in August. According to analysts from Wells Fargo, most of the gain occurred in the nonresidential category. They see that higher building costs are likely limiting activity, but spending should remain solid for the rest of the year.
Key Quotes:
“Construction spending rose 0.1% in August. Much of the gain occurred in nonresidential outlays, which increased 0.7%, while residential dropped 0.7%. Revisions were slightly positive on balance, and total spending is now 5.3% higher year-to-date.
“Rising material and labor costs are continuing to slow down residential activity. Single-family, multifamily and expenditures on improvements dropped during the month.”
“Nonresidential spending should continue to be solid in the second half of the year. The Architecture Billings Index, which leads construction activity by 9-12 months, has been solidly in expansion territory this year, notably in the South.”
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