The U.S. Census Bureau announced yesterday that nonresidential construction spending increased 0.6 percent in February and has risen 6.1 percent since February 2013. The gains follow nonresidential construction spending declines in both January and December, according to an analysis of the Census Bureau data by Associated Builders and Contractors (ABC). Spending for the month totaled $580.5 billion on a seasonally adjusted, annualized basis.
“February’s construction spending data is difficult to interpret, as was the case in December and January, because of the lengthy and harsh winter,” says ABC chief economist Anirban Basu. “The conventional wisdom is that this year’s winter weather has suppressed spending and that will make the spring recovery even stronger than it would have been, as pent up supply is released. However, the level of recovery in construction spending has not been enough to significantly improve pricing power and profit margins.
“In addition, based on ABC’s analysis of the Bureau of Labor Statistics Job Opening and Labor Turnover Survey (JOLTS), skills shortages impacting construction are becoming more commonplace, which also will place downward pressure on margins,” Basu adds.
Spending rose in several of the 16 nonresidential construction subsectors in February, including:
• Communication construction, which increased 7.2 percent in February and is up 52 percent from the same time last year;
• Amusement and recreation-related construction spending, which increased 1.7 percent in February and is up 3.1 percent from the same time last year;
• Lodging construction spending, which rose 2.9 percent in February and is 37 percent higher than the same time last year;
• Health care-related construction spending, which increased 0.4 percent but is down 4.3 percent from the same time last year; and
• Office-related construction spending, which expanded 0.2 percent in February and is 12.9 percent higher than the same time last year.
Spending in the following nonresidential construction subsectors decreased in February:
• Religious spending, which fell 7.3 percent for the month and is down 22.6 percent from the same time last year;
• Education-related construction, which fell 1.1 percent for the month and is 22.6 percent lower than the same time last year;
• Commercial construction spending, which fell 0.3 percent in February but is up 12.4 percent compared to the same time last year; and
• Manufacturing-related construction spending, which decreased 0.1 percent in February but is up 16.7 from the same time last year.