Construction spending, up 0.8% in February, was a bit weaker than the Bloomberg Econoday Consensus estimate of 1.0%.
However, the Census Department revised January from -1.0% to -0.4% so the report was a bit stronger than it appears on the surface.
Construction strength is not uniform.
Total Construction Spending in Millions of Dollars
Total Construction Spending Percent Change From Year Ago
Year-over-year residential construction spending is up 6.16% but nonresidential construction is up only 0.95%.
Construction Spending by Type
Multi-family residential is doing much better than single-family. The latter is more important as it hints at family formation.
Commercial spending is a strong indicator of future hiring.
As long as Walmart, Target, McDonalds, etc. keep building stores, the economy is likely to keep adding jobs. Nonetheless, spending is still below pre-recession levels.
Also, growth in online spending is crushing store spending and minimum wage hikes have taken a bite out of profits as well.
How much longer the commercial buildout can keep rolling on remains a key question.
Finally, these construction spending reports are very volatile and subject to huge revisions. So take all these numbers with a huge dose of skepticism.
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Mike “Mish” Shedlock