The U.S. Census Bureau of the Department of Commerce announced that construction spending during February 2016 was estimated at a seasonally adjusted annual rate of $1,144.0 billion, 0.5 percent (±1.6 percent) below the revised January estimate of $1,150.1 billion. The February figure is 10.3 percent (±2.1 percent) above the February 2015 estimate of $1,037.5 billion.
During the first two months of this year, construction spending amounted to $157.1 billion, 11.2 percent (±1.8 percent) above the $141.3 billion for the same period in 2015.
In February, the estimated seasonally adjusted annual rate of public construction spending was $297.8 billion, 1.7 percent (±3.1 percent) below the revised January estimate of $302.8 billion. Educational construction was at a seasonally adjusted annual rate of $66.4 billion, 4.2 percent (±2.6 percent) below the revised January estimate of $69.3 billion.
Highway construction was at a seasonally adjusted annual rate of $99.6 billion, 2.1 percent (±11.5 percent) below the revised January estimate of $101.7 billion.
Spending on private construction was at a seasonally adjusted annual rate of $846.2 billion, 0.1 percent (±1.0 percent) below the revised January estimate of $847.2 billion.
- Residential construction was at a seasonally adjusted annual rate of $447.9 billion in February, 0.9 percent (±1.3 percent) above the revised January estimate of $443.8 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $398.3 billion in February, 1.3 percent (±1.0 percent) below the revised January estimate of $403.4 billion.
“The key concept in this report, core construction (single-family, multifamily, state and local government and private nonresidential construction), fell 0.7 percent following a solid 2.4 percent monthly gain in January,” said Patrick Newport, U.S. economist for IHS Global Insight. “For the quarter, core construction – which is source data for many construction spending items in the national income accounts – is likely to increase close to 9 percent (annualized.)
“Single-family construction, which reflects movements in single-family housing starts over the past 12 months, increased a solid 1.2 percent while multifamily construction climbed a respectable 0.9 percent. The outlook for residential construction this year is for further solid gains driven by a pickup in household formation by young adults,” Newport continued.
“Private nonresidential spending, which has been zigzagging around the $400 billion mark for the last eight months, fell 1.3 percent, after jumping 2.7 percent in January,” Newport said. “Private nonresidential construction consists of 11 categories whose recent performance has been mixed – manufacturing, communications, and religious are slipping, office, and education and lodging are climbing and the remaining categories are moving sideways.
“Public spending fell 1.7 percent and January’s tally was revised down from 4.5 percent to 3.3 percent,” he continued. “Spending on highways and streets fell 2.1 percent while December’s and January’s estimates were revised sharply down, indicating that the boost to spending related to the Fixing America’s Surface Transportation Act (FAST Act) has not kicked in as strongly as earlier data implied.
“February’s 0.5 percent (plus or minus 1.6 percent) monthly drop in construction spending is not statistically significant,” Newport concluded. “In the parlance of statisticians, this means that one cannot rule out the null hypothesis that construction spending was unchanged in February. Because the headline and many numbers in this release are not statistically significant, we suggest putting much less weight on the latest monthly estimate than on estimates for prior months, which are based on more complete information.”