CPIP Data: Construction Growth Slows

Total construction expenditures contracted in the three months through August year over year for the first time since November 2011, according to August data for construction put in place (CPIP) released by the Department of Commerce on Monday. Privately funded projects still have positive growth on a rolling 12-month basis, but are more than negated by contraction in state, local and federal projects. All three sectors have negative momentum. Construction is extremely seasonal; the growth or contraction we report in this analysis has had seasonality removed by providing only year-over-year comparisons.

At SMU, we analyze the CPIP data with the intent to provide a clear description of activity we believe accounts for about 45 percent of total U.S. steel consumption. See the end of this report for more detail on how we perform this analysis and structure the data. In particular, note that we present NO seasonally adjusted numbers. Much of what you will see in the press may differ from our presentation because others base their comments on adjusted values. Our rational is that construction is highly seasonal and our businesses function in a seasonal world. Also, we don’t understand how the adjustments are made, nor do we trust them.