According to the U.S. Census Bureau, construction spending during February 2023 was estimated at a seasonally adjusted annual rate of $1,844.1 billion, 0.1% (±0.7%) below the revised January estimate of $1,845.4 billion.
The February figure is 5.2% (±1.2%) above the February 2022 estimate of $1,753.1 billion. During the first two months of this year, construction spending amounted to $260.8 billion, 5.9% (±1.2%) above the $246.1 billion for the same period in 2022.
In February, the estimated seasonally adjusted annual rate of public construction spending was $391.0 billion, 0.2% (±1.3%) below the revised January estimate of $391.8 billion.
- Highway construction was at a seasonally adjusted annual rate of $120.6 billion, 0.3% (±4.1%) above the revised January estimate of $120.3 billion.
- Educational construction was at a seasonally adjusted annual rate of $84.6 billion, 0.9% (±2.0%) below the revised January estimate of $85.4 billion.
Spending on private construction was at a seasonally adjusted annual rate of $1,453.2 billion, virtually unchanged from (±0.5%) the revised January estimate of $1,453.6 billion.
- Residential construction was at a seasonally adjusted annual rate of $852.1 billion in February, 0.6% (±1.3%) below the revised January estimate of $857.0 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $601.0 billion in February, 0.7% (±0.5%) above the revised January estimate of $596.7 billion.
“Continued strong demand for manufacturing plants and data centers, along with an increase in power projects, contributed to the increase in private nonresidential construction,” said Ken Simonson, Associated General Contractors of America (AGC) chief economist. “Those segments appear likely to keep growing for many months to come.”
Association officials said many projects were being held up by a lack of clear guidance about new regulatory measures associated with much of the new federal investments in construction. Confusion about the administration’s approach to Buy America rules, labor measures associated with the new semiconductor funding and registered apprenticeship mandates for the new green energy investments were either unclear or unfinished.
“The president and his team appear far more focused on interpreting laws to fit their agenda instead of progress when it comes to the billions in new federal investments Congress has authorized,” said Stephen E. Sandherr, AGC chief executive officer. “Instead of adding miles of new red tape, the administration should be working with the construction industry to find ways to get construction started as quickly as possible.”
“Nonresidential construction spending increased for the eighth time in the past nine months in February,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “Importantly, almost all of the nonresidential sector’s momentum is attributable to manufacturing-related construction, which accounted for nearly 35% of the year-over-year growth in spending. Excluding the manufacturing segment, spending in the other 15 nonresidential segments collectively declined in February.
“While the manufacturing segment should continue to see elevated levels of investment, tightening credit conditions will likely hinder nonresidential construction momentum in the near term,” said Basu. “Contractors maintain a healthy level of backlog, according to ABC’s Construction Backlog Indicator, but a gloomy economic outlook and difficulty securing financing are potential headwinds for the industry for the rest of 2023.”