Nonresidential Construction Spending Inches Higher
The U.S. Census Bureau says that nonresidential construction spending increased 0.6% in February and has risen 6.1% 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, as follows.
• Communication construction spending increased 7.2% in February and is up 52% from the same time last year.
• Highway and street-related construction spending expanded 1.3% in February and is up 11.4% compared to the same time last year.
• Amusement and recreation-related construction spending increased 1.7% in February and is up 3.1% from the same time last year.
• Lodging construction spending rose 2.9% in February and is 37% higher than the same time last year.
• Health care-related construction spending increased 0.4% but is down 4.3% from the same time last year.
• Office-related construction spending expanded 0.2% in February and is 12.9% higher than the same time last year.
• Conservation and development-related construction spending rose 5.3% in February and is up 3.1% from the same time last year.
• Power construction spending increased 4.7% for the month and is 11.4% higher than the same time last year.
Spending in eight nonresidential construction subsectors decreased in February:
• Religious spending fell 7.3% for the month and is down 22.6% from the same time last year.
• Education-related construction spending fell 1.1% for the month and is 22.6% lower than the same time last year.
• Commercial construction spending fell 0.3% in February but is up 12.4% compared to the same time last year.
• Public safety-related construction spending fell 7% in February and has declined 10.5% since the same time last year.
• Sewage and waste disposal-related construction spending declined 1.9% for the month and is 5% lower than the same time last year.
• Construction spending in the transportation category fell 1.2% in February but has increased 5.1% since the same time last year.
• Spending in the water supply category was down 10% on the month and is 18.1% lower compared to the same time last year.
• Manufacturing-related construction spending decreased 0.1% in February but is up 16.7% from the same time last year.