Construction Spending Slips Slightly, Still Strong

A 0.5 percent decline for February masks what is otherwise a very solid construction spending report that includes upward revisions and gains for the residential component. January is now revised 6 tenths higher to a gain of 2.1 percent with the residential component moving from unchanged to plus 0.9 percent. New single-family homes now show a 0.5 percent gain for January and a very strong 1.2 percent gain for February. Multi-family homes also show a gain, up 0.9 percent following a 3.6 percent January surge. Year-on-year growth for residential spending is now in the double digits at 10.7 percent.

It's the non-residential component that dragged February's totals lower, down 1.3 percent with weakness in the manufacturing, educational, and highway & street subcomponents. Still, all together, non-residential construction spending, boosted especially by hotels and also offices, is tracking in line with the residential side, at a year-on-year plus 10.6 percent.

Construction spending, along with building strength for construction employment, are isolated but still fundamental positives for the housing sector where sales growth and price appreciation, however, have stalled.

Recent History Of This Indicator:
Construction spending is expected to edge 0.2 percent higher in February in a gain that will hopefully include strength for the residential component which in January opened the year unchanged. It was a burst of spending on highway & streets that fed January's overall gain of 1.5 percent.