| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| Month over Month | 0.0% | -0.3% to 0.3% | -0.2% | 0.5% |
| Year over Year | 3.3% | 4.3% |
Highlights
U.S. construction spending in January is estimated to have contracted more than expected, declining by 0.2 percent compared to expectations for a flat reading in the Econoday survey of forecasters. December is unrevised at a 0.5 percent increase from November. The estimated level of construction spending in January is 3.3 percent higher than January 2024.
The combination of high mortgage rates and severe weather likely played a role, with private construction spending in January declining 0.2 percent from December. Residential construction spending fell 0.4 percent and non-residential saw no change.
Public construction spending saw a 0.1 percent uptick from December.
The combination of high mortgage rates and severe weather likely played a role, with private construction spending in January declining 0.2 percent from December. Residential construction spending fell 0.4 percent and non-residential saw no change.
Public construction spending saw a 0.1 percent uptick from December.
Market Consensus Before Announcement
Construction flags with no change expected in January after rising 0.5 percent in December.
Definition
The dollar value of new construction activity on residential, non-residential, and public projects. Data are available in nominal and real (inflation-adjusted) dollars.
Description
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.
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.
