Key Takeaways

• National nonresidential construction spending decreased 1.0% in February.
• On a seasonally adjusted annualized basis, nonresidential spending totaled $1.1790 trillion for the month and is up year-over-year.
• "While 15 of 16 nonresidential construction segments recorded monthly declines on a seasonally-adjusted basis, all segments have experienced year-over-year growth in spending. In 10 instances, construction spending has increased more than 10%, including 36% growth in the public safety category and 32% in manufacturing."

Press Release from Associated Builders and Contractors: ABC: Nonresidential Construction Spending Decreases in 15 Out of 16 Segments in February

WASHINGTON, April 1—National nonresidential construction spending declined 1.0% in February, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.179 trillion.

Spending was down in a monthly basis in 15 of the 16 nonresidential subcategories. Private nonresidential spending fell 0.9%, while public nonresidential construction spending was down 1.2% in February.

"Virtually every nonresidential construction segment experienced a decline in spending in February," said ABC Chief Economist Anirban Basu. "In certain instances, the monthly decline was sharp, including health care (-2.2%), commercial (-1.9%) and water supply (-1.8%). The optimist will likely shrug off both the January and February nonresidential construction spending declines as merely reflecting winter weather. The pessimist will proclaim this release a wake-up call to contractors and an indication that higher interest rates have finally begun to make their mark."

"As always, interpreting the data is complicated," said Basu. "While 15 of 16 nonresidential construction segments recorded monthly declines on a seasonally-adjusted basis, all segments have experienced year-over-year growth in spending. In 10 instances, construction spending has increased more than 10%, including 36% growth in the public safety category and 32% in manufacturing. Moreover, ABC’s Construction Confidence Index indicates that contractors remain confident with respect to their sales over the next six months, signaling that the data could improve with the weather."

Press Release from Associated General Contractors of America: Construction Spending Slips 0.3 Percent in February as Declines in Private and Public Nonresidential Projects Outweigh Growth in Homebuilding

All Categories Post Increases Compared to February 2023, Suggesting Monthly Downturn is Due to Temporary Factors Rather than Cooling Demand for Most Types of Construction Projects

Total construction spending declined from January to February to an annual rate of nearly $2.1 trillion, but all categories posted year-over-year gains, according to an analysis of a new government report that the Associated General Contractors of America released today. Association officials noted, however, that the monthly decline could have been caused by changes in winter weather patterns, including heavy rain and snow in the west, during February.

"There were monthly decreases for nearly all types of nonresidential projects," said Ken Simonson, the association’s chief economist. "But every spending segment increased from a year earlier, suggesting the current downturns may reflect short-term challenges such as severe weather, not fading demand."

Construction spending, not adjusted for inflation, totaled $2.092 trillion at a seasonally adjusted annual rate in February. That figure is 0.3 percent below the downwardly revised January rate, but 10.7 percent above the February 2023 level.

Spending on private nonresidential construction decreased 0.9 percent in February but rose 12.6 percent from February 2023. The largest segments recorded similar patterns. Manufacturing construction slid 0.6 percent for the month but jumped 31.8 percent year-over-year. Commercial construction slumped 1.7 percent in February but ticked up 0.9 percent over 12 months. Investment in power, oil, and gas projects declined 0.5 percent for the month but rose 6.9 percent year-over-year.

Public construction spending decreased 1.2 percent for the month but soared 16.8 percent from a year earlier. The largest public segment, highway and street construction, fell by 1.6 percent in February but was up 18.5 percent from February 2023. Public educational spending slumped 1.8 percent from January but climbed 15.4 percent year-over-year.

Spending on private residential construction gained 0.7 percent for the month and 6.3 percent year-over-year. Single-family construction climbed 1.4 percent from January, the tenth-straight increase. Spending on multifamily projects dipped 0.2 percent in February but remained 6.1 percent higher than a year earlier.

Association officials said the big jump in year-over-year public-sector investments in infrastructure and construction was good news for the industry, but also cautioned that many firms continue to struggle to find enough workers to hire. They urged federal, state, and local officials to boost funding for construction education and training programs to help encourage more people to seek construction careers.

"It is in the public interest to make sure there are enough people available to keep pace with growing investments in infrastructure, manufacturing and clean energy," said Jeffrey D. Shoaf, the association’s chief executive officer. "Investing in new construction education and training programs and creating a workable legal immigration process for skilled construction workers will help get key projects completed and provide another path to middle class prosperity for many workers."