What is construction spending?

An important measurement to determine the strength of economic activity in industrialized countries is construction costs. In the United States, this indicator calculates the level of housing and other residential construction costs that are completed or, in some cases, expected to be completed. Expenses incurred in the private sector and money spent on projects carried out at the state and federal levels are calculated to determine the amount of construction spending for a certain period. Construction expenditure is an important part of gross domestic product or GDP.

GDP calculates the economic output of a nation by placing a market value of all end goods and services produced within the country for a certain period of time. Commercial and government spending represents a significant amount of annual investment expenditures in the US. The costs generated in the construction industry have a direct impact on companies in the fields of finance, home furnishings, appliances and other industries. Economic vitality in the construction sector usually translates into increased sales in these operations. This association makes the building spend an important indicator sentiment to determine the overall state of health in the economy.

Each month, the US Department of Commerce’s Census Bureau releases a construction spending report that reveals the real numbers and inflation-adjusted values. This report is a compilation of data from public and private sources. A variety of methods are used to create the monthly report.

This information is focused on production starts and sales. This category also includes rental rights, homes for sale, houses built by the owner, and houses built by contract. There is also a selection of residential multi-family housing projects that are two units and upwards. This section of the report contains information about improvements in business properties. The data is taken from a review of the US Bureau of Labor Statistics.

Projects conducted by publicly owned companies public utilities governed by government are the last group incorporated construction spending report. This category covers the construction development conducted by industry organizations ranging from communications companies to oil companies. The data complied with for this module is composed of regulatory authorities, private companies and direct reports on construction work in progress.

Government building expenditures are collected from state and local municipalities and federal construction. Sampling of construction expenditures in this area is divided by construction type. Infrastructure expenses include highway, sewerage and water facilities. Data is also reported on housing, office buildings and educational opportunities built with public funds.