The seasonally adjusted annual rate of construction spending dropped again in February to $967.2 billion according to the U.S. Census Bureau. This is down about 0.1 percent from the revised January estimate of $967.9 billion. January’s preliminary estimate was $971.4 billion. Part of the blame for the drops can be attributed to the brutal winter weather many portions of country were hit with during January and February. (I believe Boston got over 110 inches of snow this winter, which makes me thankful I live in the South.)
There are some positive takeaways from the latest construction spending report. December 2014 estimates were revised up again from $982.0 billion in January to $984.5 billion in February. Also, construction spending totaled $132.9 billion for January and February 2015. This is approximately 2.0 percent higher than the $130.3 billion spent during the first two months of 2014.
Private construction spending was at a seasonally adjusted rate of $698.2 billion in February which is higher than the revised January figure of $696.9 billion. Private nonresidential construction spending rose to $348.4 billion over January’s $346.5 billion.
The annual rate for public construction spending fell from $271.0 billion in January to $268.9 billion in February. As would be expected with all the winter weather, highway construction was down in February compared to January’s rate.
There probably isn’t any real reason for concern over the two-month decrease in construction spending. Looking at historical numbers shows that the annual rate decreased in the first two months of 2014 and we still finished the year with total construction spending up 5.5 percent over 2013. Now that warmer weather is on the way, we should see construction activity picking up all across the country and spending rate should get back on track over the next couple of months.