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February Construction Spending Flat


The U.S. Census Bureau of the Department of Commerce announced that construction spending during February 2015 was estimated at a seasonally adjusted annual rate of $967.2 billion, 0.1 percent (±1.2 percent) below the revised January estimate of $967.9 billion. The February figure is 2.1 percent (±1.6 percent) above the February 2014 estimate of $947.1 billion.

During the first two months of this year, construction spending amounted to $132.9 billion, 2.0 percent (±1.5 percent) above the $130.3 billion for the same period in 2014.

In February, the estimated seasonally adjusted annual rate of public construction spending was $268.9 billion, 0.8 percent (±2.0 percent) below the revised January estimate of $271.0 billion. Educational construction was at a seasonally adjusted annual rate of $59.1 billion, 0.2 percent (±3.1 percent) above the revised January estimate of $58.9 billion.

Highway construction was at a seasonally adjusted annual rate of $82.8 billion, 0.2 percent (±5.4 percent) below the revised January estimate of $83.0 billion.

Spending on private construction was at a seasonally adjusted annual rate of $698.2 billion, 0.2 percent (±1.0 percent) above the revised January estimate of $696.9 billion. Residential construction was at a seasonally adjusted annual rate of $349.9 billion in February, 0.2 percent (±1.3 percent) below the revised January estimate of $350.5 billion. Nonresidential construction was at a seasonally adjusted annual rate of $348.4 billion in February, 0.5 percent (±1.0 percent) above the revised January estimate of $346.5 billion.

IHS Global Insight US Economists Patrick Newport and Stephanie Karol viewed the February construction spending report as negative.

"This was another poor report. Core construction, the piece of the report which influences GDP, has declined in two of the three months in the first quarter – not an auspicious start to 2015," they said.

"Residential spending disappointed in February, but this was no surprise. We can trace the decline in single-family residential spending to the past two months of data on single-family housing starts and average new home prices," they said. "Each marked monthly declines in January and February – and February’s decline in single-family starts was a massive 14.9 percent.

"Nonresidential spending expanded 0.5 percent in February (month-on-month), but this followed a 2.4 percent January decline," they said. "This category will be a drag on first quarter growth. Weather can account for some of its recent weakness; but most can be traced to a collapse (a result of overbuilding) in spending on electric power plants.

"Public construction, which has been moving sideways for the last three years when measured using nominal dollars, but dropping after adjusting for inflation, fell for the second straight month. It will also be a drag on first quarter growth," they said.

"Construction spending will be a drag on first quarter growth. What’s uncertain is the role weather played in suppressing the numbers. We are expecting improvement as 2015 progresses," they concluded.