Economy Watch: Construction Spending Up, Especially for Residential Projects
- Apr 02, 2013
The Census Bureau reported on Monday that U.S. construction spending increased 1.2 percent in February compared with January, coming in at an annualized rate of $885.1 billion for the month. That’s 7.9 percent more than during February 2012.
Private construction spending drove much of the increase, which has usually been the case in recent years during those times when spending goes up at all. More unusually, public spending was up for in February as well, though not by quite as much. Private construction spending gained 1.3 percent for the month, while public spending increased 0.9 percent.
Residential construction was at an annualized rate of $303.4 billion in February, or 2.2 percent higher than the revised January estimate of $296.9 billion. Private residential construction is now roughly equal to non-residential construction spending, after a spending a number of years lower than non-residential rate because of the housing collapse. Historically, however, residential construction usually tops all other forms of construction spending, and it’s possible that 2013 will mark a return to this pattern.
American households making less money
Median U.S. household income fell month-over-month in February, according to a report by Sentier Research released last week. It was the first monthly drop for that figure in more than a year, according to the company, which is run by former Census Bureau officials and specializes in income and demographic analysis.
In February 2013, median household income was $51,404, about 1.1 percent lower than in January, when the median was $51,994, notes Sentier. Those are only short-term trends, and the main reason for the drop in median income is inflation—which is low, but more than enough to eat up the very modest gains in worker income over the same period.
The drop in median income over a longer period has been more pronounced, and more a function of dropping pay than inflation. Since the official beginning of the Great Recession in late 2007, income is down 7.3 percent; since the technical beginning of the recovery in mid-2009, it’s down 5.6 percent.
Manufacturing sector still expanding
The latest Manufacturing ISM Report On Business, which was released on Monday, said that the U.S. manufacturing sector was still expanding in March, though not quite as quickly as in previous months. The organization’s PMI came in at 51.3 percent, a decrease of 2.9 percentage points from February’s reading of 54.2 percent.
The Employment Index registered 54.2, an increase of 1.6 percentage points compared to February. The Prices Index decreased 7 percentage points to 54.5. Both the New Orders and Production Indexes grew in March, coming in at 51.4 and 52.2 percent, respectively, and the Backlog of Orders, Exports and Imports Indexes all grew during the month.
Wall Street had a down day on Monday, with the Dow Jones Industrial Average off 5.69 points, or a scant 0.04 percent. But the S&P 500 and Nasdaq lost more: 0.45 percent and 0.87 percent, respectively.