Construction spending is on the rise according to the latest monthly release from the U.S. Census Bureau. February’s seasonally adjusted rate was at $1.19 trillion, up nearly 1% from the revised January estimate of $1.18 trillion. Construction spending is at its highest level since April 2006 after it had declined the previous two months. A spending rebound of 1.1% was expected, said economists polled by Reuters.
The data is collected through surveys in all 50 states and Washington, D.C. They gather information on four construction types: privately owned nonresidential construction, state and local construction, privately owned multifamily, and federal construction projects. It estimates the cost of labor and materials and contractor’s profits, among other items.
On a year-over-year basis for February and the first two months of 2017, total construction spending was up 3%. The latter works out to be a positive difference of nearly $5 billion. Meanwhile, private construction saw a spending increase of 0.8%, or about a $7 billion increase from January. Public construction spending saw a smaller rise of $1.6 billion in February. Educational and highway construction also increased from January to February.
Total private construction jumped nearly 7% from February 2016 to February 2017 while total public construction spending dropped 8% over the same time period. Residential construction spending moved upward more than 6%, but nonresidential spending only increased 1%. A main reason for the small increase was due to a nearly 30% drop in sewage and waste disposal spending and an almost 20% dip in conservation and development spending over the year time frame.
Within total public construction, power spending slipped more than 36% from February 2016 and over 11% from January 2017. Total nonresidential lodging, office and commercial spending each saw major breakthroughs from February 2016 despite little or no change from January 2017.
“The construction sector hasn't been on fire but continues to post passable numbers, and momentum may begin to build at least for the housing sector as permits for both single- and multifamily units are on the climb,” according to Econoday. “Construction spending is a good indicator for the economy’s momentum,” said the economic website.
Warmer weather in February helped construction start earlier this year, but late winter weather could cause a fallback in March, said Wells Fargo. Data for March will be released by the Census Bureau on May 1.
– Michael Miller, editorial associate