Data from Census Department, chart by MishConstruction spending reports are so horribly lagging that I stopped commenting on the for a while.But interesting trends are underway. Also, these late reports will influence GDP revisions.So I created some new chart this month to show what’s going on.Negative RevisionsThe June Construction Spending report was a disaster.The Bloomberg Econoday consensus was for a rise of 0.2 percent.Instead, the Census Department reported a decline of 0.3 percent and it revised May from -0.1 percent to -0.4 percent.Economists effectively missed the mark by 0.8 percentage points to the downside.Commercial Construction SpendingCommercial construction spending was down 9 consecutive months.I thought this might be office spending related, but office spending was up in three of those months and flat in a fourth. Edit: Office and commercial are part of nonresidential, but office is not part of commercial.Year-Over-Year SpendingYear-over-year spending is still positive except for commercial, but everything is downward sloping.Year-over-year commercial construction spending went negative in October of 2023 and has stayed there ever since, generally declining.It’s now down 14.0 percent year-over-year.Construction Spending Billions of Dollars Every key component of construction has peaked and is rolling over except for manufacturing.The latter is due to misguided attempts by the auto industry to roll out EVs and more importantly free money from the Biden administration for autos, chip manufacturing, solar manufacturing, etc.Commercial Construction CategoriesThe Census Department has a nice breakdown of Construction Spending Categories.In general, commercial Includes buildings and structures used by the retail, wholesale and selected service industries.Offices are part of nonresidential construction as is commercial. But offices are not part of commercial.Here’s a spotlight on commercial construction.

Commercial Construction a Driver of Job GrowthCommercial construction is only $125,171 billion compared to $939,806 residential, $483,850 public, and $2,148,444 total.However, once houses and roads are built, there are no further directly related jobs. Once stores are built, there are many directly related jobs.Commercial construction is a tiny component of construction spending but a mighty contributor to future jobs once completed.The Manufacturing ISM Index DisasterDespite the boom in manufacturing spending, the July Manufacturing ISM Index Is Lower Than Every Economist’s Estimate

The ISM manufacturing report was a disaster from every angle, especially employment , production, and backlogs. Employment reading worst since June 2020.

Please read what some of the respondents are saying. It a disaster in every industry.Small Business Employment Growth Is Now Negative Data from ADP, chart by MishYesterday, I commented Small Business Employment Growth Is Now Negative (and What It Means)

ADP data shows year-over-year payroll growth is negative 88,000 for small corporations sized 20-49. Trends are negative in all but very large corporations.

On July 26, I commented Expect the BLS to Revise Job Growth Down by 730,000 in 2023, More This Year

At the heart of these revisions is a horribly flawed birth-death model used by the BLS. My calculation closely matches an estimate by Bloomberg’s chief Economist.

In addition to the birth-death model, or perhaps explaining the birth-death model errors, small business employment is declining fast.Looking AheadIf businesses are not expanding stores and restaurants, then they won’t be hiring to staff those stores and restaurants either.“All Hell Breaks Loose” In the Next Few Months as Recession BitesOn July 25, I commented “All Hell Breaks Loose” In the Next Few Months as Recession BitesTwo of us are still adamant that a recession has started. The other is Danielle DiMartino Booth, in her best video yet.Please take a look.More By This Author:The Manufacturing ISM Index Is Lower Than Every Economist’s Estimate
Small Business Employment Growth Is Now Negative (And What It Means)
Fed Is Attentive To The Risks To Both Sides Of Its Dual Mandate