Non-residential spending growth was led by educational facilities, which rose by $2.6 billion, or 2.8%. Office projects saw a $1.1 billion, or 1.6%, increase in spending. Power projects came in third, spending on which rose $702 million, or 0.7%. Conservation and development and religious projects both saw a 3.7% increase in spending, tied for the largest increase on a percentage basis. The biggest decline in non-residential spending was in manufacturing, which fell by $1.2 billion, or 1.7%. Highway and street projects saw an $876 million, or 1.0%, decline, while commercial spending dropped by $552 million, or 0.7%. The biggest percentage decline came in communications, where spending fell 1.9%. Transportation spending also fell by 1.2%.
Private spending plunged by $6.1 billion, or 0.6%, half of which came from residential projects, where the $3.1 billion decline was the largest in nearly three years. On the non-residential side, weakness was seen in manufacturing, which fell by $1.2 billion, and educational facilities, which dropped by $1.0 billion. Meanwhile, public spending rose by $5.9 billion, or 2.1%, driven largely by a big $3.6 billion increase in spending on educational facilities, the most in nearly a year.
The residential sector of the U.S. economy has been a pillar of strength over the last several years. Thus, the recent spike in interest rates amid talk of the Fed shrinking its balance sheet is cause for concern, for the construction industry and the overall economy.