Wells Fargo Reports: Construction Spending Rose in August

Total construction spending was up 0.5 percent in August, though July’s drop was worse than first reported. Public spending was up slightly in August after considerable weakness in June and July.

Outlays Up Across the Board in August

• Construction spending was up 0.5 percent in August. Revisions brought more of June’s weakness to July. Beyond the month-to-month volatility and revisions, total construction is running 4.7 percent ahead of last year on a year-to-date basis.
• Private construction is buoying total construction outlays as the government continues to spend less on most construction categories. Public outlays are down 5.3 percent year-to-date.

Private Residential Had Solid Footing Pre-Storms

• Private residential construction outlays were up 12.6 percent year-to-date through August. Both single- and multifamily units were up solidly. Construction spending data in coming months are likely to be very volatile due to hurricanes derailing projects and as rebuilding gets underway. The seasonal adjustment will likely exacerbate impacts during fall months. We expect residential construction to be a drag on GDP until maybe next spring.