Nonresidential Construction Spending Declines in February

On Monday, the Associated Builders and Contractors (ABC) reported that US nonresidential construction spending declined for the second consecutive month in February, falling 0.1%. On a seasonally adjusted annual basis, nonresidential spending totaled $1.179 trillion.

According to ABC’s analysis of the US Census Bureau’s February construction spending report, spending was down on a monthly basis in 15 of the 16 nonresidential subcategories. Private nonresidential spending fell 0.9%, while public nonresidential spending fell 1.2% in February.

In remarks and analysis accompanying the report, ABC Chief Economist Anirban Basu said:

“Virtually every nonresidential construction segment experienced a decline in spending in February. In certain instances, the monthly decline was sharp, including health care (-2.2%), commercial (-1.9%), and water supply (-1.8%). The optimist will likely shrug off both the January and February nonresidential construction spending declines as merely reflecting winter weather. The pessimist will proclaim this release a wake-up call to contractors and an indication that higher interest rates have finally begun to make their mark.

As always, interpreting the data is complicated. While 15 of 16 nonresidential construction segments recorded monthly declines on a seasonally adjusted basis, all segments have experienced year-over-year growth in spending. In 10 instances, construction spending has increased more than 10%, including 36% growth in the public safety category and 32% in manufacturing. Moreover, ABC’s Construction Confidence Index indicates that contractors remain confident with respect to their sales over the next six months, signaling that the data could improve with the weather.”