Construction Spending: Positive Revisions, Trends Still Concerning

Bottom Line:   Construction spending, lagged and prone to significant revisions, was revised higher for December and January but fell in February. The trend in residential construction has continued to the downside, but the pace of declines has slowed. Nonresidential construction was quite robust in the 2nd half of 2022, but the pace of gains started to slow in the last few months. Overall after a period of high volatility with a very sharp slowdown in residential and strong gains in non-resi, construction spending looks to be moderating to an annualized pace of 2-3% with continued more modest declines in resi and slower but still positive non-resi spending.