April 1, 2021

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Construction spending (the green bars above) declined 0.8% in February after having risen 1.2% in January and 2.1% in December.  The dip in February undoubtedly reflects the series of snow and ice storms that paralyzed much of the Midwest and Northeast throughout that month.    This series has been rising steadily since the recession ended in April of last year and is now well above to its pre-recession pace.  In the past twelve months construction spending has risen a solid 5.3%.

Private construction spending (excluding the government sector) fell 0.5% in February after having risen 1.5% in January and 2.7% December.. It continues to recover from the recession caused caused by the imposition of the nationwide quarantine to combat the spread of the corona virus.

Within the private construction spending category, residential spending edged lower by 0.2% in February after having jumped 2.2% in January and 5.0% in December..  In fact, the pace of residential construction is significantly faster now than it was prior to the recession..  In the past 12 months residential construction spending has risen 21.1%.  The housing sector is on fire as new home sales are at the fastest pace since 2006.  Mortgage rates of 3.1% certainly help.  As does the fact that renters in expensive metropolitan areas are fleeing the city and buying homes in less expensive suburbs as well as homes in resort communities in places like Lake Tahoe, the Jersey shore, and the mid-Atlantic beaches.

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Private nonresidential construction fell 1.0% in February after having risen 0.4% in January and having declined 0.8% in December.  At this point we do not need new or bigger factories, there is ample office space available, as well as retail space.  This sector will eventually come back, but that is still a ways down the road.

Public sector construction fell 1.7% in February after having risen 0.4% in January and 0.2% in December.  This category can be quite volatile on a month-to-month basis.  In  the past year such spending has declined 0.3%.

Stephen Slifer

NumberNomics

Charleston, SC