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Friday, April 5, 2013

Construction Spending Remains on Track in February

Following a decline in the previous month, construction spending rose 1.2 percent in February. Residential increased 2.0 percent on the month and nonresidential rose 0.7 percent. Public spending was also up.

Single-Family Posts Eleventh Straight Gain Construction outlays rose 1.2 percent in February to a $885.1 billion annualized pace, which was roughly in line with consensus expectations. Private residential rose 2.2 percent with single-family outlays up 4.3 percent in February, the largest monthly gain since August 2009. Based on monthly housing market indicators and solid momentum in household formations, we expect residential will continue to improve.

Nonresidential Outlays Reverses Decline Private nonresidential spending rose 0.4 percent in February and is now up about 6 percent on a year-ago basis. The largest gains were in power, manufacturing, commercial and lodging. We expect commercial and lodging will continue to buoy the headline throughout the year, with power and manufacturing modestly improving. Regarding public outlays, state and local rose 1.1 percent, while federal spending showed weakness.

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