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Construction Spending Report: An Overview


Release Date: First Week of each Month
Release Time: 10:00 AM ET
(Find the previous reports)

When the Census Bureau releases its data for Construction Spending, this data appears in the Wall Street Journal online much as it did at 10:00 AM ET on May 1, 2015.  (These reports come out early in the first week of every month.)  For example, the data for March, 2015:

Construction Spending—M/M Change:

Prior: -0.1%

Consensus: 0.4%

Consensus Range -0.6% to 1.8%

Actual: -0.6%      

Many market participants simply glance at these numbers. With the exception for investors who trade in the homebuilders or in lumber, the Construction Spending report is often considered to be one of the less important economic indicators. In part this may be because these numbers are often perceived to lack predictive powers; they are often seen to serve as coincident indicators of the general momentum of the economy. Some, however, use them to predict upcoming GDP numbers, which in turn can be used to forecast market movements.

The figures for Prior Month, Consensus, and Consensus monthly construction spending figures are supplied in large part so that readers can get a sense of the most recent trends. The Consensus numbers represent a collection of estimates held by expert analysts in the field.

The data above come from the U.S. Census Bureau website: www.census.gov/construction. Within this site, there is a file called U.S. Census Bureau News, which contains most of the worthwhile data for those not in the construction fields.

This May 1st edition, 2015 begins by describing the seasonally adjusted, annualized rate of construction spending at $966.6 billion; in other words, this is the dollar quantity of construction that would result if the March pace of construction were to continue throughout 2015. Note also that the report covers construction activity that occurred two months previous to the month that the report was publicized. Next, in order to provide us with more unadjusted, raw numbers, the Bureau also gives us the real unannualized, unadjusted total amount of construction spending for the first three months of 2015, which was $206.7 billion.  Now, if one were to annualize a not seasonally adjusted pace of construction from this 3 month number, one would get $826.8 billion, a full $140 billion less than the seasonally adjusted number. This shows how extreme these adjustments can be. To a great extent, this makes sense because construction slows substantially in most parts of the country in January, February, and March.

Construction Spending data includes only “new” construction. There has long been a bit of controversy about what constitutes “new” construction in this report. Sometimes the line can be blurred between “new” construction and “maintenance.” However, “new” construction definitely does not include roads, machinery, or some towers. Nor does it include gas and oil wells or platforms. This data must be found elsewhere.

The U.S. Census Bureau News breaks down the Construction data into two categories, “Private Construction” ($702.4 billion) and “Public Construction” ($264.2 billion). “Private Construction” is in turn broken down into “Residential” ($349.0 billion) and “Non-residential” ($353.4 billion, all annualized and seasonally adjusted) construction. Analysts generally pay more attention to the Private Construction figures than the public ones because they are deemed to provide a more accurate reflection of the strength or weakness of the broader economy.

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