February 2016 Construction Spending Growth Rate Declined?

The headlines say construction spending declined – and below expectations. The backward revisions make this series very wacky – but the rolling averages again improved.

Econintersect analysis:

Growth acceleration 0.3 % month-over-month and Up 11.4 % year-over-year.

Inflation adjusted construction spending up 10.4 % year-over-year.

3 month rolling average is 10.5 % above the rolling average one year ago, and up 0.6 % month-over-month. As the data is noisy (and has so much backward revision) – the moving averages likely are the best way to view construction spending.

Unadjusted Construction Spending – Three Month Rolling Average Compared to the Rolling Average One Year Ago

US Census Analysis:

Down 0.5 % month-over-month and Up 10.3 % year-over-year (versus the reported 8.2 % year-over-year growth last month).

Market expected -0.5 % to 0.7 % month-over-month (consensus +0.2) versus the -0.5 % reported

Construction spending (unadjusted data) was declining year-over-year for 48 straight months until November 2011. That was almost four years of headwinds for GDP.

Indexed and Seasonally Adjusted Total Construction Spending (blue line) and Inflation Adjusted (red line)

This month’s headline statement from US Census:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during February 2016 was estimated at a seasonally adjusted annual rate of $1,144.0 billion, 0.5 percent (±1.6%)* below the revised January estimate of $1,150.1 billion. The February figure is 10.3 percent (±2.1%) above the February 2015 estimate of $1,037.5 billion. During the first 2 months of this year, construction spending amounted to $157.1 billion, 11.2 percent (±1.8%) above the $141.3 billion for the same period in 2015.

PRIVATE CONSTRUCTION -Spending on private construction was at a seasonally adjusted annual rate of $846.2 billion, 0.1 percent (±1.0%)* below the revised January estimate of $847.2 billion. Residential construction was at a seasonally adjusted annual rate of $447.9 billion in February, 0.9 percent (±1.3%)* above the revised January estimate of $443.8 billion. Nonresidential construction was at a seasonally adjusted annual rate of $398.3 billion in February, 1.3 percent (±1.0%) below the revised January estimate of $403.4 billion.

PUBLIC CONSTRUCTION – In February, the estimated seasonally adjusted annual rate of public construction spending was $297.8 billion, 1.7 percent (±3.1%)* below the revised January estimate of $302.8 billion. Educational construction was at a seasonally adjusted annual rate of $66.4 billion, 4.2 percent (±2.6%) below the revised January estimate of $69.3 billion. Highway construction was at a seasonally adjusted annual rate of $99.6 billion, 2.1 percent (±11.5%)* below the revised January estimate of $101.7 billion.