Construction Expenditures (CPIP) Through August

Each month the Commerce Department issues its Construction Put in Place (CPIP) data, usually on the first working day covering activity two months earlier. August data was released on Thursday October 1st.

Construction Put in Place is based on spending work as it occurs, estimated for a given month from a sample of projects. In effect the value of a project is spread out from the project’s start to its completion. Construction starts data published by the Commerce Department for residential construction, by Dodge Data & Analytics and Reed Construction for non-residential and Industrial Information Resources for industrial construction is completely different as in these cases the whole project is entered to the data base when ground is broken. This results in the starts data being extremely spiky which is not the case with CPIP. This month we have a situation where the CPIP data is very good on a year/year basis but the starts data which is month/month is not. Dodge Analytics, who we have great respect for, reported that total construction starts were down by 11 percent from July. “New construction starts in August dropped 11 percent to a seasonally adjusted annual rate of $554.5 billion, according to Dodge Data & Analytics. Declines were reported for each of construction’s three main sectors – nonresidential building and housing pulled back from their improved July pace, while non-building construction continued to recede from the heightened performance witnessed earlier in 2015. During the first eight months of 2015, total construction starts on an unadjusted basis were $446.1 billion, up 15 percent from the same period a year ago. If the volatile electric utility and gas plant category is excluded, total construction starts during the first eight months of 2015 would be up a more moderate 7 percent relative to last year.” In this SMU analysis we don’t normally comment on month over month results but to put the Dodge data into perspective, total construction expenditures according to CPIP was up by 2.5 percent August/July.