Nonresidential construction spending fell 1 percent in February but was still up more than 14 percent from a year earlier, according to U.S. Census Bureau data released April 1. January’s decline included declines in 15 of 16 segments.
The value of nonresidential construction started in February was a seasonally adjusted $1.03 billion, according to the Census Bureau. The sharpest decline was in health construction spending, which fell 2.2%, followed by commercial spending down 1.9% and water supply construction spending down 1.8% .
Transportation was the only segment with an increase during the month, measured at 0.7%, according to the Census Bureau.
Private non-residential construction fell 0.9% in February, compared with a 1.2% decline for public non-residential construction. But compared to a year earlier, the private increased by 12.6% and the public by 16.8%.
Despite the overall decline for the month, economists watching the industry say the drop in spending may be temporary. Ken Simonson, chief economist for the Associated General Contractors of America, said in a statement that with spending in all segments still rising compared to the previous year, “the current downturns may reflect near-term challenges such as the severe climate, the undiminished demand.”
Anirban Basu, chief economist at Associated Builders and Contractors, said the drop could be an impact of high interest rates, but also pointed to the overall increase compared to a year earlier and pointed to the index of ABC construction confidence, showing that most contractors surveyed expect sales to remain flat or increase slightly over the next six months.
Chart courtesy of Associated Builders and Contractors with data from the US Census Bureau“The optimist will likely shrug off the decline in non-residential construction spending in both January and February as only reflecting winter weather,” he said. “The pessimist will proclaim this statement a wake-up call to contractors and an indication that higher interest rates have finally started to take their toll.”
added bass, “As always, interpreting the data is complicated.”
Census Bureau officials note that month-to-month changes in seasonally adjusted statistics can show erratic movements, and it can take anywhere from two to eight months to establish a trend, depending on the segment.
