Spending on new construction continued to soften in February, falling 0.3 percent, according to numbers released today by the U.S. Census Bureau. That puts annual construction spending at a seasonally adjusted pace of $1,121.6 billion, which represents a 3.5 percent drop compared to last year.
Residential construction also slowed by 0.9 percent, to a seasonally adjusted annual rate of $456.9 billion in February.
Overall, however, the numbers were not as low as economists expected. Global Insight based in Lexington, Mass., for example, had projected a decline of 1.5 percent for the value of construction put in place. While the report was more positive than expected (or rather, less negative), Brian Bethune, U.S. economist for Global Insight, cautioned that this sector of the economy remains weak.
"We are still in the mode of seeing declines," he says. "That's not going to change in any near period of time."
What would be a more sustainable figure for total construction spending? Positive growth of a half percent monthly, Bethune says, which would add up to a 6 percent annual gain in the construction sector.
However, in today's economy, that type of growth is a long way off. In the meantime, though, the Global Insight economist says he'd settle for an end to the negative numbers, because it would indicate some stability in the market at last. "The really important phase to get through is to just flatten out," he says.