Highlights
Construction spending in February fell again but not as much as expected. Construction outlays dropped another 0.9 percent in February, after plunging 3.5 percent in January. February's decline was not as severe as the market projection for a 1.5 percent drop. Weakness in February was led private residential outlays, which fell 4.3 percent. The single-family subcomponent dropped 10.9 percent while the multifamily portion slipped 2.1 percent.

The other two major components actually made partial rebounds. The private nonresidential component rose 0.3 percent after a 4.3 percent drop in January. Public outlays rebounded 0.8 percent, following a 2.4 percent decrease the month before.

On a year-on-year basis, overall construction outlays improved marginally to down 10.0 percent in February, from down 10.1 percent in January.

Today's report shows construction's decline slowing. But this is likely temporary until fiscal stimulus on public construction kicks in. However, on the news, equities pulled back from earlier declines. Also, the ISM manufacturing index edged up and pending home sales posted a moderate gain-also positives for equities. Stocks had dropped notably at open on a sharp drop in ADP employment and on news that the Obama Administration is likely preparing for pre-planned bankruptcies for GM and Chrysler.

Market Consensus before announcement
Construction spending in January fell at a faster pace, declining a monthly 3.3 percent in January, after dropping 2.4 percent the month before. Weakness in January was led by a sharp 4.3 percent plummet in private nonresidential outlays. The private residential component also declined and by 2.9 percent while public outlays rebounded 0.6 percent. Looking ahead, we may get a small bump up in residential spending due to a rebound in housing starts. But outlays are based on lagged effects from several months of starts, so don't expect much of a rise in residential outlays. Also, businesses and state and local governments are cutting back on new construction when possible due to revenue issues.

2009 Release Schedule

Released On: 1/5 2/2 3/2 4/1 5/4 6/1 7/1 8/3 9/1 10/1 11/2 12/1 Release For: Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct