MDM will provide a synopsis of construction spending trends each month, with a focus on analysis and a look at the segments of construction that gained and lost during the month.
Construction spending in February 2013 was up 2 percent from the month before and up 7.9 percent from February 2012. Here is the breakdown:
- Private residential construction spending was up 2.2 percent from January, and up 20.1 percent year-over-year
- Private nonresidential construction spending was up 0.4 percent from January and up 6.1 percent year-over-year
- Public construction spending was up 0.9 percent from January, and down 1.5 percent year-over-year
The February 2013 data was released April 1.
According to Associated Builders and Contractors Chief Economist Anirban Basu, the most interesting aspect of February’s results was the increase in public nonresidential construction, which was up 1.1 percent from January. “This is a segment that has been slumping for an extended period, and the expectation has been that public nonresidential construction would continue to struggle to acquire momentum due to the impact of the automatic sequestration. However, the impacts of sequestration largely remain in front of us,” Basu said.
In the private sector, nonresidential construction appears to be stronger, he said. “While the nonresidential construction industry’s recovery cannot be characterized as brisk, there continues to be forward momentum in a number of key private segments, including lodging and power.”
“It is encouraging to see growth in both monthly and year-over-year totals in private residential and nonresidential construction spending,” said Ken Simonson, the chief economist for the Associated General Contractors of America. “There are increasing signs that 2013 will be a good year for a wide variety of project types.”
While sales of newly built, single-family homes declined 4.6 percent in February, according to the National Association of Home Builders, Chairman Rick Judson said it is the second highest monthly total since April 2010 when then federal home buyer tax credit expired. February’s decline was an adjustment for the strong sales seen in January, he said.
Regionally, new-home sales activity was mixed in February, according to the NAHB, with the Midwest posting a gain of 13.7 percent, while the Northeast, South and West showed declines of 13.3 percent, 9.7 percent and 2.1, respectively.
NAHB Chief Economist David Crowe said as the economy and job market continue to improve, modest but steady growth can be expected. “But constraints on borrower credit, higher building material prices and a limited supply of labor and buildable lots hold back a more robust recovery,” he said.
Simonson said he expects that construction of new houses and apartments will continue to boom in coming months, due to recent housing starts and building permits, reports of rising rents, and occupancy rates and new-home sales in many markets. “On the nonresidential side, there should be a lot of activity involving pipelines, manufacturing, railroads and trucking, and warehouses,” he said.
“If the nation is able to continue to add jobs as it has in recent months, office and commercial segments should also experience improved performance.” ABC’s Basu said.
According to Census Bureau data, the following construction segments overall had the greatest gains or declines in spending in February 2013 from February 2012. It is not broken out by private vs. public sectors.
Winners: Largest Gains from February 2012
- Residential Construction: +19.2%
- Transportation: +18.3%
- Lodging: +16%
- Office: +10.5%
- Manufacturing: +9.5%
Losers: Largest Losses or Smallest Gains from February 2012
- Public safety: -13.1%
- Sewage and waste disposal: -12.7%
- Amusement and recreation: -10%
- Religious: -9.7%
- Educational: -5.9%