Construction MMI: February construction spending up 6% year over year

The Construction Monthly Metals Index (MMI) fell 8.0% this month.
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U.S. construction spending

U.S. construction spending in February reached a seasonally adjusted annual rate of $1,366.7 billion, down 1.3% from the January total, the U.S. Census Bureau reported in its most recent construction spending release.
However, the February spending figure marked a 6.0% increase compared with February 2019 spending.
Through the first two months of 2020, construction spending amounted to $193.5 billion, up 8.2% compared with the same two-month period in 2019.
Private construction spending hit a seasonally adjusted annual rate of $1,025.8 billion, down 1.2% from January.
Under the umbrella of private construction, residential construction reached a seasonally adjusted annual rate of $564.3 billion, down 0.6% from the revised January estimate of $567.6 billion. Nonresidential construction fell 2.0% to $461.5 billion in February.
Public construction, meanwhile, reached an estimated seasonally adjusted annual rate of $340.9 billion, down 1.5% from January.
Within public construction, educational construction was down 1.5% to a seasonally adjusted annual rate of $79.5 billion. Highway construction dropped 1.2% to a seasonally adjusted annual rate of $102.4 billion.
Robert Dietz, chief economist for the National Association of Home Builders, analyzed the impact of the coronavirus outbreak and the tightening of lending standards.
“More fundamentally, anecdotal reports indicate lending standards are increasing for mortgage applications, and lending conditions for residential construction is tightening despite lower rates,” Dietz wrote. “Without financing for builders, housing starts will slow significantly. NAHB is conducting weekly polling, part of which asks about builder financing availability.” (source: nahb.org)
In addition, amid shelter-in-place orders aimed at curbing the spread of the novel coronavirus, potential home buyer traffic has already taken a hit, according to NAHB survey data.
“In NAHB survey data from this week, potential buyer traffic ranked as the most immediate concern, with 69% of builders indicating major declines,” Dietz wrote. “89% of remodelers noted that home owners cited concerns about interacting with workers and crews. Several more issues surveyed worsened this week. For example, the percentage of builders who cited an increase in delays of single-family permit approval increased from 57% to 80%. Building inspection delays increased from 50% to 78%. Multifamily concerns are rising about rent payments as well.”

Infrastructure spending in the age of the coronavirus

With the economy under stress from the coronavirus outbreak, one area for potential revitalization lies in the infrastructure sector.
Late last month, Congress passed and President Donald Trump signed into law a $2.2 trillion coronavirus stimulus package.
House Speaker Nancy Pelosi had previously been supportive of tackling infrastructure needs in subsequent coronavirus-related stimulus packages but appeared to take a different tack in a CNBC interview Friday.
“While I’m very much in favor of doing some things we need to do to meet the needs — clean water, more broadband, the rest of that — that may have to be for a bill beyond this,” Pelosi was quoted as saying by The Hill.
With the focus on the worsening health crisis and increasing rates of infection as testing has ramped up, infrastructure’s place in any future coronavirus stimulus packages remains to be seen, even if infrastructure improvement is broadly considered a bipartisan issue.
“With interest rates for the United States being at ZERO, this is the time to do our decades long awaited Infrastructure Bill,” Trump tweeted March 31. “It should be VERY BIG & BOLD, Two Trillion Dollars, and be focused solely on jobs and rebuilding the once great infrastructure of our Country! Phase 4.”
Previous infrastructure proposals floated by Trump ultimately did not gain traction.
Perhaps the gravity of the current pandemic, from the health crisis to the resulting deleterious impact on employment levels, will inspire big-picture thinking with respect to tackling a wholesale overhaul of America’s infrastructure.
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Actual metal prices and trends

The Chinese steel rebar price fell 2.1% month over month to $488.55/mt as of April 1. Chinese H-beam steel fell 1.3% to $495.61/mt.
U.S. shredded scrap steel fell 7.5% to $260/st.
European commercial 1050 aluminum sheet dropped 8.5% to $2,172.25/mt.
Chinese 62% iron ore PB fines fell 1.3% to $74.13 per dry metric ton.