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Economy in Brief

U.S. Construction Spending Unchanged in April; Previous Months Revised Higher
by Gerald D. Cohen  June 3, 2019

The value of construction put-in-place was flat in April (-1.2% year-on-year) following an upwardly-revised 0.1% gain in March (was -0.9%). February was also revised higher, to 1.0% from 0.7%. The Action Economics Forecast Survey had expected a 0.5% rise. Given the positive revisions to previous months, on net, this report was stronger than expected. And, based on this data, the construction spending portion of first quarter GDP is likely to be revised higher. In the first quarter GDP report released last Thursday private construction spending (nonresidential + residential) subtracted 0.1 percentage point from GDP growth.

The private and public sectors exhibited significantly different spending patterns. The 1.7% drop in private construction (-6.0% y/y) in April was offset by a 4.8% jump in public spending (+15.1% y/y).

The fall in private spending was concentrated in nonresidential construction (-2.9%; +0.6% y/y). The decline was fairly broad based, though led by 7.2% drop in the volatile manufacturing sector (+11.5% y/y). Residential construction declined 0.6% (-11.4% y/y), with a 2.3% rise in multifamily (+7.9% y/y) offset by a 2.5% decrease in home improvements (-21.7% y/y). Meanwhile, single family activity was an unchanged (-7.6% y/y).

Nonresidential construction, which makes up 98% of public construction, jumped 4.8% in April (15.4% y/y). Construction of highways and streets, the largest category in the public sector, jumped 6.8% (21.3% y/y) after a 21.9% gain in the three months ending in March. Education construction, the second largest category, rose 2.1% (9.6% y/y). Public residential construction grew 4.6% (-0.6% y/y).

The construction spending figures, some of which date back to 1946, are in Haver's USECON database. The expectations reading can be found in the AS1REPNA database.

Construction Put in Place (SA, %) Apr Mar Feb Apr Y/Y 2018 2017 2016
Total 0.0 0.1 1.0 -1.2 3.9 4.5 7.0
  Private -1.7 0.0 0.1 -6.0 3.1 7.1 9.2
    Residential -0.6 -1.2 -0.7 -11.4 2.8 12.4 10.7
    Nonresidential -2.9 1.3 0.9 0.6 3.4 1.3 7.7
  Public 4.8 0.5 3.9 15.1 6.4 -3.2 0.7
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