Residential Spending Drags Down Overall Outlays
Source: Economics Group of Wells Fargo Bank, N.A.
Summary
Construction Spending Dips in January
Total construction outlays declined 0.2% during January. Residential spending ended a three-month streak of gains and fell 0.5% during the month. Although single-family spending continued to expand, multifamily and home improvement spending both dropped. Meanwhile, total nonresidential spending rose modestly as solid gains in infrastructure and data center spending offset weakness in manufacturing, commercial and education projects. While relatively resilient economic growth and the lagged impulse from recent federal spending packages should continue as support factors, elevated interest rates and increased economic policy uncertainty stand to constrain construction activity moving forward.
Residential Construction Weakens Despite Single-Family Upturn
- Residential construction spending fell 0.5% in January, driving overall construction outlays lower. Residential outlays softened for both public and private construction.
- Waning multifamily construction was the culprit behind the drop in private residential outlays. Private multifamily construction spending slipped 0.7% in January, marking the 14th consecutive monthly decline. This long slide has prompted a 12% year-over-year drop in multifamily outlays as of January.