“The conventional wisdom is that this year’s winter weather has suppressed spending and that will make the spring recovery even stronger than it would have been, as pent up supply is released." —ABC Chief Economist Anirban Basu.
The U.S. Census Bureau announced today that nonresidential construction spending increased 0.6 percent in February and has risen 6.1 percent since February 2013. The gains follow nonresidential construction spending declines in both January and December. Spending for the month totaled $580.5 billion on a seasonally adjusted, annualized basis.
“February’s construction spending data is difficult to interpret, as was the case in December and January, because of the lengthy and harsh winter,” said Associated Builders and Contractors Chief Economist Anirban Basu. “The conventional wisdom is that this year’s winter weather has suppressed spending and that will make the spring recovery even stronger than it would have been, as pent up supply is released. However, the level of recovery in construction spending has not been enough to significantly improve pricing power and profit margins.
“In addition, based on ABC’s analysis of the Bureau of Labor Statistics Job Opening and Labor Turnover Survey (JOLTS), skills shortages impacting construction are becoming more commonplace, which also will place downward pressure on margins,” Basu said.
Spending rose in eight of the 16 nonresidential construction subsectors in February:
• Communication construction spending increased 7.2 percent in February and is up 52 percent from the same time last year.
• Highway and street-related construction spending expanded 1.3 percent in February and is up 11.4 percent compared to the same time last year.
• Amusement and recreation-related construction spending increased 1.7 percent in February and is up 3.1 percent from the same time last year.
• Lodging construction spending rose 2.9 percent in February and is 37 percent higher than the same time last year.
• Health care-related construction spending increased 0.4 percent but is down 4.3 percent from the same time last year.
• Office-related construction spending expanded 0.2 percent in February and is 12.9 percent higher than the same time last year.
• Conservation and development-related construction spending rose 5.3 percent in February and is up 3.1 percent from the same time last year.
• Power construction spending increased 4.7 percent for the month and is 11.4 percent higher than the same time last year.
Spending in eight nonresidential construction subsectors decreased in February:
• Religious spending fell 7.3 percent for the month and is down 22.6 percent from the same time last year.
• Education-related construction spending fell 1.1 percent for the month and is 22.6 percent lower than the same time last year.
• Commercial construction spending fell 0.3 percent in February but is up 12.4 percent compared to the same time last year.
• Public safety-related construction spending fell 7 percent in February and has declined 10.5 percent since the same time last year.
• Sewage and waste disposal-related construction spending declined 1.9 percent for the month and is 5 percent lower than the same time last year.
• Construction spending in the transportation category fell 1.2 percent in February but has increased 5.1 percent since the same time last year.
• Spending in the water supply category was down 10 percent on the month and is 18.1 percent lower compared to the same time last year.
• Manufacturing-related construction spending decreased 0.1 percent in February but is up 16.7 from the same time last year.
To view the previous spending report, click HERE.