Mixed bag for March construction spending


In a good news/bad news report, private nonresidential construction spending decreased 0.7 percent in March, according to the May 3 release by the U.S. Census Bureau. On a year-over-year basis, private nonresidential construction spending is down 25.5 percent. However, total nonresidential construction spending, which includes both public and private construction, was up 0.8 percent for the month – the first monthly increase since April 2009 – but still down 17.4 percent from March 2009. As of March, the value of nonresidential construction put-in-place was $586.8 billion.

Nine of the 16 nonresidential construction subsectors with spending increases in March include transportation, up 9.6 percent; water supply, up 6.1 percent; and manufacturing-related construction, up 5.1 percent. However all subsectors, with the exception of power-related construction, which was 22.2 percent higher, are down from March 2009 levels.

In contrast, seven subsectors that had a decrease in construction spending include communication, down 12 percent; lodging, 4.5 percent lower; and commercial, which fell 1.9 percent. The worst-performing subsectors in construction spending on a year-over-year basis include lodging, down 59.7 percent; commercial, down 36.8 percent; and office, down 34.1 percent.


“Today’s report should be interpreted as a significant piece of good news regarding the nation’s nonresidential construction indusdtry, ” said Associated Builders and Contractors Chief Economist Anirban Basu. “While year-over-year construction spending remains negative, nine of the 16 subsectors of nonresidential construction were up for the month. In addition, March represented the first monthly gain for nonresidential construction since April 2009, an indication that the broader economic recovery is beginning to impact the nonresidential construction industry.

“From an optimistic viewpoint, April could very well represent the first in a series of months of sustained recovery and expansion in nonresidential construction spending,” Basu said. “The nation’s economy has been gathering momentum for quite some time, with consumer spending exceeding most people’s expectations. If one presumes that the broader economic recovery is sustainable, it is also possible to conclude that the nonresidential construction industry’s emerging recovery will also be sustained. ”

“On the reverse side, March could represent a month of false hope in which publicly financed construction has offset the economic weakness of privately financed construction. With the stimulus package money steadily being spent, the notion is that the early recovery in nonresidential construction will not be sustained, particularly if the broader economy suffers another slump next year. This perspective continues to enjoy a certain degree of credibility since the sectors that have rebounded are those largely oriented toward publicly financed projects,” Basu said.

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