US: Do not expect a material acceleration in construction spending – Nomura

Analysts at Nomura suggest that it is likely that the recent hurricanes affected activity in September as well as August as Hurricane Harvey made a landfall in Texas only in the last week of the month, August construction spending advanced a decent 0.5% m-o-m.

Key Quotes

“Hurricane Irma, which hit Florida in September, may have impaired construction activity in the month. Yet, aside from the transitory impact of the recent hurricanes, construction activity has been weak. Residential construction outlay has been weighed down by the continued slowdown in the multifamily sector in Q3.”

“Coupled with tighter lending standards for commercial real estate loans, investment in business structures slowed relative to Q2 as well. Although rebuilding activity in the aftermath of the hurricanes could boost construction, we think the effect would be only gradual spread over the coming quarters. Therefore, we do not expect a material acceleration in overall construction spending.”