U.S. construction spending rises above expectations in February

Construction spending in the U.S. came in above expectations in February, while the data for the prior month was upwardly revised, implying a solid beginning to 2019. Overall spending rose 1 percent sequentially, driven by a solid rise in non-residential construction, which rose 1.2 percent, while residential spending rose at a more modest rate of 0.7 percent.

Public construction growth came in solid for the second straight month, and it surpassed private construction considerably. On the public side, the state and local government component has been especially buoyant since the beginning of the year. Some parts of private residential spending were subdued in February – both multifamily and single-family construction dropped compared with a month earlier. The home improvements category continued to increase solidly, however, maintaining the positive momentum since November 2018.

Above expected construction spending in the private residential sector in February, combined with upward revisions for December and January, stimulated the first quarter estimate for residential investment, which led the tracker to rise by one tenth to 1.8 percent, noted Barclays in a research report.

“We also received data on business inventories for January, which were better than expected, raising our estimate of inventory investment. However, it had little effect on our overall tracker, leaving it broadly unchanged at 1.8%, after rounding”, added Barclays.

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