Construction Spending Remains Strong

Home sales may be puttering along but construction spending nevertheless remains of the strongest reports on the calendar. Construction spending did inch a lower-than-expected 0.3 percent higher in March but February is now revised sharply higher, from a 0.5 percent decline to a 1.0 percent gain.

Residential spending rose 1.6 percent in March driven by gains for multi-family homes with single-family homes flat. The latter is a disappointment but does follow steady strength in prior reports.

Non-residential spending rose 0.7 percent in March led by transportation and including a respectable gain for manufacturing, one that may hint at better results for capital spending. Public spending on educational building and on highways is also up but not quite offsetting steady weakness in Federal spending and a monthly downturn for what has been strength at the state & local level.

Year-on-year, total construction spending is up 8.0 percent, which includes a 7.8 percent gain on the residential side and a 9.3 percent gain on the non-residential side. These are down from 10 percent rates in prior reports but are still very hard to match anywhere else in the economy.

Recent History Of This Indicator:
Construction spending is expected to rise 0.5 percent in March to offset a 0.5 percent decline in February, one that masked a strong 0.9 percent gain for residential spending. Non-residential spending was the weak spot in February, falling 1.3 percent. Still, both components are posting 10 percent year-on-year growth which is far above other readings on the economy.