Construction MMI: U.S. construction spending drops 0.2%

The Construction Monthly Metals Index (MMI) traded flat this month for a February MMI reading of 79.
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U.S. construction spending

U.S. spending on construction reached a seasonally adjusted annual rate of $1,327.7 billion in December, marking a 0.2% drop from November but a 5.0% increase on a year-over-year basis.

Meanwhile, private construction spending came in at a seasonally adjusted annual rate of $991.2 billion in December, down 0.1% from November.
Broken down further, residential construction came in at $540.7 billion, up 1.4% from November. Nonresidential construction checked in at $450.5 billion, down 1.8% from November.
As for public construction, spending checked in at a seasonally adjusted annual rate of $336.4 billion, down 0.4% from November. Education construction checked in at $80.4 billion, down 2.1% from November. Highway construction spending reached a rate of $99.1 billion, up 3.1% from November.
Overall, the value of construction spending in 2019 reached $1,303.5 billion, down from 0.3% from 2018.

ABI closes 2019 on a strong note

The Architecture Billings Index (ABI), which is released monthly by the American Institute of Architects and tracks billings growth, closed 2019 on a positive note after having spent most of the year in sideways or contractionary territory.
The ABI checked in at 52.5 in December, with anything greater than 50 indicating billings growth. The December reading marked an increase from November’s 51.9.
“Although the period of declining and flat billings earlier in the year was one of the most protracted since the end of the Great Recession, firms remain cautiously optimistic about business in the coming months,” this month’s ABI report stated. “In addition, backlogs at architecture firms remained strong in December, with firms reporting an average backlog of 6.3 months. Backlogs have extended beyond six months since the spring of 2018.”
By region, the West led the way in December with an ABI reading of 54.0, followed by the South (52.2), Midwest (51.9) and Northeast (44.0).
This month’s ABI survey asked architecture firms about their marketing spending, to which half indicated no change in spending from 2018 to 2019, while 34% indicated they had increased their spending on marketing.

Housing starts surge in December

As we noted last month, U.S. housing starts jumped 16.9% in December, reaching their highest level in 13 years.
Privately owned housing starts reached a seasonally adjusted annual rate of 1,608,000 in December, according to the Census Bureau and Department of Housing and Urban Development.

Source: U.S. Census Bureau/HUD data

On a year-over-year basis, December starts were up 40.8%.

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Actual metals prices and trends

The Chinese rebar price gained 0.9% month over month to $530.49/mt as of Feb. 1. Chinese H-beam steel increased 2.3% to $531.93/mt.
U.S. shredded scrap steel gained 6.1% to $296/st.
European commercial 1050 sheet aluminum fell 1.3% to $2,536.13/mt.
62% iron ore PB fines increased 0.4% to $75.68/dmt.

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