Economic News Blog
Posted by: Steven Kline, Jr. 4. November 2016

Construction Spending Virtually Flat in September

(Negative) The real value of construction put in place in September 2016 was $106,189 million. Compared with one year ago, this was an increase of just 0.5 percent, which was the slowest rate of growth since construction spending started the current growth cycle in December 2011. The month-over-month rate of change has grown at a decelerating rate since September 2015. The annual rate of change peaked in the same month and has grown at a decelerating rate since. Annual, construction spending is growing at a rate of 3.2 percent, which is the slowest rate since January 2012. That was the last time spending contracted.

Residential construction spending is slowing as well. Month-over-month growth decelerated to 2.3 percent in September, which was the slowest rate of growth since January 2012. The annual rate of growth, now 13.4 percent, has decelerated nine months in a row and was the slowest since January 2015.

The above is negative for products, parts, and production of equipment used in the construction industry. However, the change in the real 10-year treasury rate has been moving lower since the end of 2015. Also, the change has been negative, meaning the rate has been lower than it was one year ago since May. And, the change in the rate is the most negative since mid 2012, which means that the real interest rate is falling at its fastest rate since mid 2012. This should help stem the tide in the slower growth in construction spending and may even cause construction spending to grow faster in 2017.



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