April may be the cruelest month, as the saying goes, but February is proving to be a close contender for builders this year.
According to data released Thursday by the U.S. Census Bureau, overall construction spending, which includes public and private projects, declined 1.3% in February to a seasonally adjusted annual rate of $846.2 billion. That represents a 12.8% year-over-year drop and reflects reductions across all types of private nonresidential construction.
“Nearly every category in this sector is in a meltdown, with lodging (down 53% year-over-year), amusement and recreation (down 46%), manufacturing (down 35%), office (down 38%), commercial (down 38%,) and religious construction (down 24%) declining the most over the last twelve months,” said Patrick Newport, U.S. economist at research firm IHS Global Insight in Lexington, Mass. “The only nonresidential construction category showing sustained growth was power, which is up 9% [year-over-year]. This category, we believe, is being driven by a surge in spending on wind and solar energy projects.”
Against such a backdrop, the slight decline (down 0.1% on a monthly basis) in single-family construction and the flat (0% change) in multifamily activity practically sounds like cause for celebration.
“The one bright spot in this report may be the flat reading for multiple-family construction spending, but this followed massive declines in November, December, and January,” Newport noted. “Single-family construction slipped 0.1%, the first drop in nine months.”
In terms of dollars, single-family construction spending in February stood at a seasonally adjusted pace of $115.4 billion, which translates into an increase of 3.9% compared to the same month last year. Multifamily activity recorded a seasonally adjusted spending level of $17.6 billion in February, which is down 52.2% year-over-year.
Weather could have been a factor. February brought severe winter storms to much of the country, which experts believe impacted new-home sales and other economic statistics during the month.
Alison Rice is senior editor, online, at BUILDER magazine.