The total value of construction put in place is down 0.1 percent in January from December following a downward revision to down 0.7 percent in December from November. The January percent change matches the consensus in an Econoday survey. Spending on new construction is down 0.6 percent in January for residential building and up 0.3 percent for nonresidential.

Residential construction continues to feel the impact of higher mortgage rates despite a dip in December and January from the near-term highs in October and November 2022. The effect is mostly in the building of single-family homes which are down 1.7 percent from the prior month and have declined for eight straight months. However, spending on multi-family units is up 0.4 percent in January and has risen for six months in a row. Multi-unit homes are generally less expensive than single-family units and may be more appealing to renters looking to become homeowners. Current homeowners continue to invest in their properties. Spending on home improvement and renovation is up 0.3 percent in January from December and has risen in 8 of the last nine months.

Private nonresidential spending is up 0.9 percent in January with a mixed performance in categories. Most notable is a 6.0 percent increase in spending on manufacturing construction. Also notable is a 3.2 percent decline in spending on commercial development.

Total private construction is unchanged in January from December and public construction is down 0.6 percent.

After falling 0.4 percent in December, construction spending for January is expected to rise 0.2 percent. December saw the first decline for nonresidential spending in seven months and the seventh straight decline for residential spending.

The dollar value of new construction activity on residential, non-residential, and public projects. Data are available in nominal and real (inflation-adjusted) dollars.

Construction spending has a direct bearing on stocks, bonds and commodities because it is a part of the economy that is affected by interest rates, business cash flow and even federal fiscal policy. In a more specific sense, trends in the construction data carry valuable clues for the stocks of home builders and large-scale construction contractors. Commodity prices such as lumber are also very sensitive to housing industry trends.

Businesses only put money into the construction of new factories or offices when they are confident that demand is strong enough to justify the expansion. The same goes for individuals making the investment in a home.

A portion of construction spending is related to government projects such as education buildings as well a highways and streets. While investors are more concerned with private construction spending, the government projects put money in the hands of laborers who then have more money to spend on goods and services.

On a technical note, construction outlays for private residential, private nonresidential, and government are key inputs into three components of GDP--residential investment, nonresidential structures investment, and the structures portion of government expenditures.

That is why construction spending is a good indicator of the economy's momentum.