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Economy in Brief

U.S. Construction Spending Growth Slackens
by Tom Moeller  May 1, 2015

Momentum in the building sector has weakened significantly. The value of construction put-in-place slipped 0.6% during March following no change in February, revised from -0.1%. Year-to-year growth of 2.0% follows gains of roughly 6.0% during 2013 and 2014. A 0.5% March rise had been expected in the Action Economics Forecast Survey.

The growth slowdown in private construction activity has been pronounced. Building eased 0.3% in March following a 0.3% rise. The y/y gain of 2.9% is down from 8.0% last year. Residential building activity declined 1.6% following little change in February. Negative y/y growth of 2.6% compares to a 5.1% rise last year and a 20.4% 2013 increase. Single-family building activity fell 1.8% (+7.8% y/y) after a 1.1% decline. Annual growth had been 10-30%. Multi-family building dropped 2.1% (+23.4% y/y), the first fall since July. The y/y gain of 23.4%, though still firm, is down from a one-third increase in 2014. Spending on improvements declined 1.0% and was down by one-quarter versus last year.

Nonresidential building activity improved 1.0% but y/y growth of 9.0% showed slightly less momentum than last year's 11.2% gain. Office construction jumped 2.9% (26.3% y/y) but commercial building fell 2.7% (+12.1% y/y). An area showing continued strength was amusements & recreation. Though activity fell 3.4% in March, the y/y increase of 29.5% was up from 6.3% last year and 16.2% in 2013.

Public sector building activity fell 1.5% (-0.3% y/y), the third month of decline, and it's off 7.5% since an October high. Nonresidential building fell 1.5% (-0.6% y/y) but commercial construction increased 12.4% (35.8% y/y) after a 6.6% rise. Power construction slipped 0.3% (-14.0% y/y) while highways and streets construction moved 2.4% lower (-5.6% y/y). Construction here amounts to 32% of public sector building activity.

The construction spending figures are in Haver's USECON database and the expectations figure is contained in the AS1REPNA database.

Construction Put in Place (%) Mar Feb Jan Mar Y/Y 2014 2013 2012
Total -0.6 0.0 -1.2 2.0 6.1 5.7 9.2
  Private -0.3 0.3 -0.3 2.9 8.0 10.1 16.0
    Residential -1.6 0.2 1.3 -2.6 5.1 20.4 14.4
    Nonresidential 1.0 0.5 -1.8 9.0 11.2 0.6 17.5
  Public -1.5 -0.8 -3.5 -0.3 1.5 -3.5 -2.8
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