What happened
Shares in building controls/systems and heating, ventilation, and air conditioning (HVAC) company Johnson Controls (JCI 1.02%) were up by almost 2.4% by around 10 a.m. ET today, bucking the trend of a declining S&P 500 at the time.
Whenever a stock makes such a contrarian move, it's a good idea to check on its peers. Doing so reveals that its HVAC rivals Trane, Carrier, Lennox, and AAON were all up simultaneously -- other building products and equipment showed strength simultaneously.
All of this is a roundabout way of arguing that the collective reason for the move comes down to the relatively positive data on U.S. construction spending data from the U.S. Census Bureau released today.
So what
Going into the data, economists were expecting a 0.4% decline from October's seasonally adjusted annual rate figure of $1,794.9 billion.
However, the data showed a 0.2% increase on an upwardly revised figure of $1,803.2 billion for October, resulting in a November rate of $1,807.5 billion.
Of particular note and relevance for Johnson Controls, given it's more exposed to nonresidential spending than residential spending, is that nonresidential construction spending was up 0.9% on October compared to residential spending, which declined 0.5% on October.
Now what
The data points to the argument that ongoing solidity in nonresidential spending on HVAC will help Johnson Controls offset weakness in its residential HVAC business. Meanwhile, its building systems and controls business (heavily exposed to commercial buildings) will remain in good shape.
All told, the stock remains a viable option for investors in 2023.
