Home » Behind the Headlines » Construction Spending thru Aug’22

Construction Spending thru Aug’22

Construction Spending year-to-date thru August is up 10.9% and is on track to finish the year up 10.1%. Leading gainers for 2022 forecast are Manufacturing spending up 23%, Commercial/Retail up 17% and Residential with a 2022 forecast up 16%. Nonres bldgs are forecast up 7.8%. Nonbuilding Infrastructure is held to a forecast loss of 0.3% due to nearly a 10% drop in Power but offset by a 16% gain in Sewer/Water/Conservation. Every nonresidential building category thru August year-to-date inched closer to both my midyear forecast and my current annual forecast. This plot shows the spending forecast from starts cashflow vs actual spending to date. Starts cashflows do a good job of predicting spending. starts-cf-index-nonres-2015-2022-10-3-22 Significant changes since my 9-1-22 forecast: Residential up $11bil 1.3%, Manufacturing up $6bil up 8%. Residential construction spending is down 3.5% from the most recent peak in Mar 2022. It is on track to finish the year up 16%. Residential construction starts, $ as measured by Dodge, JJA 3mo avg is down 10% from the peak in the previous 3mo. But that peak qtr, MAM, is up 5% from the total in 2021 which was up 22% from 2020. Avg starts for the last 20 months has remained above the former high in 2005. spending-ytd-2022-plus-markets-2021-2023-10-3-22 Nonresidential Buildings Construction spending is on track to finish the year up 8% powered by a 23% increase in Manufacturing spending and a 17% increase in Commercial/Retail spending. Nonresidential Bldgs new starts are projected to finish up 22% in 2022. spend-all-monthly-current-2018-2023-10-3-22 Total ALL Nonresidential construction spending, buildings and nonbuilding, is down 2.8% from the most recent peak in March 2022, but is up 5.2% year over year. Total Nonresidential spending is on track to finish the year up 4%, led by a 7.5% annual increase in Nonres Bldgs. but held back by a 9% drop in Power, 30% of the non-building total. Spending took a downturn in April but this is expected to turn up after September. Most of the downturn is due to residential. By October all sectors are forecast to post gains. spend-sector-monthly-current-2018-2023-10-3-22 The difference between these two plots is INFLATION, which adds nothing to the volume of work. The CONSTANT$ plot is like the volume of business that takes place. The Spending plot shows the $ that changed hands to conduct that business volume.

2 Comments

  1. Greg O. says:

    Thank you for the analysis. Are the dollars presented in this post adjusted for inflation so that percentages represent real volume changes?

    Like

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