Wednesday, April 01, 2020

Construction Spending Decreased in February

by Calculated Risk on 4/01/2020 10:19:00 AM

From the Census Bureau reported that overall construction spending increased in February:

Construction spending during February 2020 was estimated at a seasonally adjusted annual rate of $1,366.7 billion, 1.3 percent below the revised January estimate of $1,384.5 billion. The February figure is 6.0 percent above the February 2019 estimate of $1,289.0 billion.
emphasis added
Both private and public spending decreased:
Spending on private construction was at a seasonally adjusted annual rate of $1,025.8 billion, 1.2 percent below the revised January estimate of $1,038.5 billion. ...

In February, the estimated seasonally adjusted annual rate of public construction spending was $340.9 billion, 1.5 percent below the revised January estimate of $345.9 billion.
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 had been increasing - but turned down in the 2nd half of 2018.  It started increasing again, but will slow due to the pandemic.  Residential spending is 17% below the previous peak.

Non-residential spending is 11% above the previous peak in January 2008 (nominal dollars).

Public construction spending is 5% above the previous peak in March 2009, and 30% above the austerity low in February 2014.

Year-over-year 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 11.3%. Non-residential spending is down slightly year-over-year. Public spending is up  7.4% year-over-year.

This was well below consensus expectations of a 0.6% increase in spending, however construction spending for December and January were revised up.

Construction spending will decline due to COVID-19, although construction is considered an essential service in most areas.