Construction spending holds steady

Construction spending in June was somewhat stronger than expected, just as the ISM index for July was stronger than expected. It's not that construction spending is growing, however, it's that it is not declining further. Total construction spending has been flat so far this year, and residential construction has managed to post some enduring gains over the past 12 months. That is much better than the fear-mongers have been expecting.

I like the fact that construction has stopped declining. This is a good sign that the bulk of the adjustments in the sector (e.g., declining real estate prices) have been made, and that the ground is being prepared for future gains. Lenders are beginning to be more willing to lend, and builders and developers more confident about committing to new projects. Things aren't great by any stretch, but on the margin they are no longer deteriorating, and that's good.