Friday, April 01, 2016

Construction Spending decreased 0.5% in February

by Bill McBride on 4/01/2016 12:35:00 PM

The Census Bureau reported that overall construction spending decreased 0.5% in February compared to January:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during February 2016 was estimated at a seasonally adjusted annual rate of $1,144.0 billion, 0.5 percent below the revised January estimate of $1,150.1 billion. The February figure is 10.3 percent above the February 2015 estimate of $1,037.5 billion.
Both private and public spending decreased in February:
Spending on private construction was at a seasonally adjusted annual rate of $846.2 billion, 0.1 percent below the revised January estimate of $847.2 billion. ...

In February, the estimated seasonally adjusted annual rate of public construction spending was $297.8 billion, 1.7 percent below the revised January estimate of $302.8 billion.
emphasis added
Private Construction Spending Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Private residential spending has been increasing, but is 34% below the bubble peak.

Non-residential spending is only 4% below the peak in January 2008 (nominal dollars).

Public construction spending is now 9% below the peak in March 2009.

Private Construction SpendingThe second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is up 11%. Non-residential spending is up 11% year-over-year. Public spending is up 9% year-over-year.

Looking forward, all categories of construction spending should increase in 2016. Residential spending is still very low, non-residential is increasing (except oil and gas), and public spending is also increasing after several years of austerity.

This was below the consensus forecast of a 0.2% increase for February, however construction spending for December and January were revised up.  Overall construction spending is up 10.3% year-over-year,  a solid increase.