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Economy in Brief

U.S. Construction Spending Increase Follows Two Months of Decline
by Tom Moeller  April 3, 2017

The value of construction put-in-place gained 0.8% during February (+3.0% y/y), after easing 0.4% in January and 0.2% during December. The increase compares to expectations for a 1.0% rise in the Action Economics Forecast Survey. Despite these lackluster monthly performances, the dollar level of construction activity was near the all-time high and was nearly two-thirds higher than the 2010 low.

Private sector construction activity increased 0.8% (6.9% y/y) in February following no change in January. Residential building gained 1.8% (6.4% y/y), the strongest rise in three months. Multi-family building rose 2.0% (10.6% y/y) after a 4.0% rise. Single-family building increased for a second straight month by 1.2% (3.4% y/y). The value of improvements jumped 2.7% (9.6% y/y) and reversed the prior month's drop. Nonresidential building activity eased 0.3% (+7.5% y/y), about as it did in January. Office construction rebounded 0.5% (24.8% y/y), but commercial construction eased 0.8% (+13.6% y/y) after a 0.3% decline. These dips follow out-sized strength in 2016. Manufacturing sector construction declined 1.7% (-9.8% y/y) following no change. Power plant construction strengthened 3.0% (9.4% y/y) to the highest level since mid-2014.

Public sector building activity improved 0.6% (-8.0% y/y) following three months of decline. Educational facility spending improved 0.5% (0.5% y/y) after a 1.8% increase. Transportation facilities building gained 0.8% (-10.4% y/y) and office building fell 2.9% (-7.8% y/y). Highways and streets, about one-third of total public construction, increased 1.3% (-5.1% y/y) after January's 0.1% uptick.

The construction spending figures are in Haver's USECON database and the expectations reading is contained in the AS1REPNA database.

Construction Put in Place (SA, %) Feb Jan Dec Feb Y/Y 2016 2015 2014
Total 0.8 -0.4 -0.2 3.0 4.8 10.3 11.4
  Private 0.8 0.0 0.5 6.9 6.7 12.5 15.4
    Residential 1.8 0.2 0.9 6.4 5.6 16.8 14.6
    Nonresidential -0.3 -0.2 0.1 7.5 7.9 8.1 16.3
  Public 0.6 -1.9 -2.6 -8.0 -0.4 4.5 1.9
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