US: Modest increase in construction spending - Nomura

US construction spending increased a modest 0.1% m-o-m in February after an unchanged reading in January, notes the research team at Nomura.

Key Quotes

“Private construction spending rose strongly by 0.7% with private residential construction up 0.1% and private non-residential construction up a solid 1.5%. Private non-residential office construction spending increased solidly by 6.5%, pushing the 12-month change up into positive territory for the first time since June 2017. Incoming data point to weak residential construction in Q1, while investment in non-residential structures likely rose steadily. Elsewhere, public construction spending declined 2.1% in February after increasing by an average of 1.8% over the past six months.”

“Healthcare construction spending was particularly weak in February. While non-residential construction spending overall rose by only 0.1%, nonresidential construction excluding healthcare increased 0.4%. February’s sharp decline in healthcare construction spending could reverse in the months ahead, posing some upside risk to March construction spending.”

“GDP tracking update: Incoming data on private residential and government construction outlays were in line with our expectations. However, non-residential construction in February was stronger than we expected, suggesting stronger growth in real investment in non-residential structures in Q1. Thus, we raised our Q1 GDP tracking estimate by 0.1pp to 1.8% q-o-q saar.”