Construction spending is down 0.1 percent in February from January after an upward revision to up 0.4 percent in January. Total spending is up 5.2 percent year-over-year. The February change is just below the consensus for a flat reading in an Econoday survey. While residential construction is down for the ninth month in a row, nonresidential construction has been up in 8 of the past 9 months with the exception of a scant 0.1 percent decline in December 2022.

Private residential construction is down 0.6 percent in February from January and down 5.7 percent compared to a year ago. Single-family home construction spending is down 1.8 percent in February from January and down 21.4 percent compared to a year ago. However, spending on multi-unit home construction is up 1.4 percent month-over-month, and 22.2 percent higher year-over-year. Homebuilders are finding a market for smaller, less expensive multi-unit properties and are taking advantage of the recent dips in mortgage rates to secure buyers for units not yet started and under construction. Spending on home improvements total private residential spending less single- and multi-unit spending is unchanged in February from January and up 8.0 percent compared to February 2022.

Spending on nonresidential building is up 0.4 percent in February from January, and 16.8 percent higher year-over-year. Spending is particularly strong for manufacturing which sees a 2.6 percent month-over-month gain and is up 53.5 percent from a year ago.

Flat month in and month out, construction spending for February is expected to come in unchanged following January's 0.1 percent decline.

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.