Confidence still high as US non-residential construction dips in February

The US-based Associated Builders and Contractors (ABC) released a report analysing data from the US Census Bureau, which found non-residential spending took a dip in 15 of 16 tracked subcategories from January to February, but year-over-year numbers remain elevated.

National non-residential construction spending declined 1% last month, said ABC. On a seasonally adjusted annualized basis, non-residential spending totalled US$1.18 trillion.

Private non-residential spending fell 0.9%, while public non-residential construction spending was down 1.2% in February.

“Virtually every non-residential construction segment experienced a decline in spending in February,” confirmed 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%).”

Basu noted it’s not concrete what the dip means for future activity.

“The optimist will likely shrug off both the January and February non-residential construction spending declines as merely reflecting winter weather,” he said. “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.”

Basu noted that while the majority of segments are seeing monthly decreases in spending, 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,” he said. “Moreover, ABC’s Construction Confidence Index indicates that contractors remain confident with respect to their sales over the next six months, signalling that the data could improve with the weather.”

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