A leading indicator for construction spending bounced back in February, particularly in the South, following a negative reading in January, according to Anika R. Khan, a senior economist with Charlotte-based Wells Fargo Securities.
Architecture billings rose 0.7 percentage points to 50.3, barely above the line indicating expansion. That suggests some moderation in construction activity is imminent, Khan said in a research report this month.
On a regional basis, billings in the South continued to post gains, while all other areas fell below the threshold of 50, Khan said.
By sector, multifamily and commercial/industrial rose during the month. Institutional and mixed-use contracted.
Billings typically are a leading indicator for construction outlays, providing a forward-looking signal for up to 12 months, Khan said.
“Given the recent trend in services, we are forecasting a slower pace of construction spending this year,” she said. “Private nonresidential construction spending rose almost 12 percent in 2015, but will likely increase at a single-digit rate this year as growth in industrial and institutional spending moderates.”