US DATA
Construction activity surprised significantly to the upside in December, rising 0.5% M/M (0.2% expected, 0.2%), with residential construction leading the way.
- Private sector construction (more than 75% of total spend, with public spending the remainder) rose by 0.9% M/M to a fresh all-time high on a SAAR basis, with residential construction up 1.5%.
- The latter is picking up again after a lull in the fall, which may have been impacted by hurricanes.
- Public sector construction - which had been soaring for most of H2 2024 - pulled back sharply at -0.5%, the weakest since July 2023 and after a 0.1% contraction in November.
- There has been a clear pickup in private versus public sector spending: the 3M/3M annualized rise in private sector spending hit a 31-month high 6.2%, with public spending slowing to 7.3% by that metric, vs double-digit growth in the preceding 2 months.
- Private nonresidential investment on the other hand remained fairly soft, growing just 0.1% M/M (same as prior) and has been fairly static for 6+ months.
- Considering the apparent recovery in both "soft" and "hard" manufacturing indicators, manufacturing construction has failed to pick up any momentum - it remains below mid-2024 levels, albeit that came after an impressive tripling of spending over the preceding 3 years.
- These figures are all in nominal terms but broadly reflect what we saw in the Q4 GDP figures: residential investment rose for the first time in 3 quarters (+5.3% Q/Q annualized in real terms) with nonresidential structures contracting for a 2nd consecutive quarter (-1.1%).
- Both look to be stabilizing going into 2025.
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