Construction spending rises in August
|Summary
Construction spending continues to buck the headwinds
Construction activity this year has been largely resilient to broader macroeconomic headwinds. Total outlays increased 0.5% in August, solidifying an eight-month streak of improvements in 2023 and amounting to a 7.4% year-over-year gain. Yet as construction outlays rise on trend, clear divisions are forming under the surface. An uptick in single-family starts has bolstered construction spending over the last few months, largely owed to builders’ success with incentives in the high mortgage rate environment. Multifamily outlays, by contrast, appear to be moderating as a near-record number of apartment units is set to deliver over the next few years. Similar dynamics are playing out within nonresidential construction. A bump in manufacturing outlays was the single-largest driver of August's overall increase in the nonresidential spending, a familiar theme following the shift toward domestic electric vehicle and semiconductor production. Alternatively, tighter credit conditions and higher financing costs have weighed on commercial construction, which was the largest drag on nonresidential outlays in August.
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