Construction spending during February 2019 was estimated at a seasonally adjusted annual rate of $1,320.3 billion, 1.0 percent (±0.8 percent) above the revised January estimate of $1,307.3 billion. The February figure is 1.1 percent (±1.5 percent) above the February 2018 estimate of $1,305.5 billion.
During the first two months of this year, construction spending amounted to $181.9 billion, 1.4 percent (±1.3 percent) above the $179.4 billion for the same period in 2018.
In February, the estimated seasonally adjusted annual rate of public construction spending was $325.8 billion, 3.6 percent (±1.6 percent) above the revised January estimate of $314.4 billion.
Highway construction was at a seasonally adjusted annual rate of $111.1 billion, 9.5 percent (±5.3 percent) above the revised January estimate of $101.5 billion. Educational construction was at a seasonally adjusted annual rate of $76.3 billion, 0.8 percent (±2.0 percent) above the revised January estimate of $75.7 billion.
Spending on private construction was at a seasonally adjusted annual rate of $994.5 billion, 0.2 percent (±0.8 percent) above the revised January estimate of $993.0 billion.
- Residential construction was at a seasonally adjusted annual rate of $540.9 billion in February, 0.7 percent (±1.3 percent) above the revised January estimate of $536.9 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $453.6 billion in February, 0.5 percent (±0.8 percent) below the revised January estimate of $456.0 billion.
“The spending increase in February follows an extremely strong 2.5 percent gain in January, which aligns with contractors’ reports that they were busy early in the year and expect to stay that way through 2019,” said Ken Simonson, chief economist for the Associated General Contractors of America. “The major challenge they face is finding enough workers.”
Public construction accounted for the bulk of the monthly and annual increases, while private categories were mixed, the economist noted. Public construction spending jumped 3.6 percent for the month and 11.5 percent year-over-year. The largest public category, highway and street construction, soared 22.8 percent from a year ago. Educational construction, the next-largest segment, rose 5.5 percent year-over-year.
“A number of economic readings have come in weaker than expected of late, including retail sales and February employment,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Now private nonresidential construction has effectively flatlined during the past year, with spending virtually unchanged on a year-ago basis despite higher materials costs. This suggests that the actual physical amount of construction put in place has declined in real terms during the past year.
“As is often the case, it’s tempting to blame the weather,” said Basu. “It is absolutely true that the upper Midwest and New England were hit hard by precipitation and bitterly cold temperatures this winter, which undoubtedly suppressed some level of activity. However, softer growth in private nonresidential construction has been apparent for months. This is not a new phenomenon. Spending in the office, commercial and lodging categories was flat to declining in February.
“By contrast, public nonresidential construction spending was up sharply,” said Basu. “This strongly suggests that there is more at work than weather in terms of factors shaping the data. State and local government finances have continued to improve as the broader economy has expanded. America has generated job growth for 101 consecutive months, which has helped push income tax collections higher and unemployment insurance payments lower. Property values also have risen, as have sales tax collections.
“The standout is the highway and street category, which has experienced nearly 23 percent growth in spending on a year-over-year basis,” Basu added. “Policymakers also have been paying considerable attention to flood control (with conservation and development up 19 percent year over year) and water systems (with water supply up nearly 12 percent).”