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Construction Spending Rises 0.8% vs. 1.0% Expectation: Nonresidential Rolling Over?

Construction spending, up 0.8% in February, was a bit weaker than the Bloomberg Econoday Consensus estimate of 1.0%.

However, the Census Department revised January from -1.0% to -0.4% so the report was a bit stronger than it appears on the surface.

Construction strength is not uniform.


Total Construction Spending in Millions of Dollars

Total Construction Spending


Total Construction Spending Percent Change From Year Ago

Total Construction Spending Percent Change From Year Ago

Year-over-year residential construction spending is up 6.16% but nonresidential construction is up only 0.95%.


Construction Spending by Type

Construction Spending by Type
Larger Image

Multi-family residential is doing much better than single-family. The latter is more important as it hints at family formation.


Commercial Spending

Total Construction Spending: Commercial

Commercial spending is a strong indicator of future hiring.

As long as Walmart, Target, McDonalds, etc. keep building stores, the economy is likely to keep adding jobs. Nonetheless, spending is still below pre-recession levels.

Also, growth in online spending is crushing store spending and minimum wage hikes have taken a bite out of profits as well.

How much longer the commercial buildout can keep rolling on remains a key question.

Finally, these construction spending reports are very volatile and subject to huge revisions. So take all these numbers with a huge dose of skepticism.

 

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