Construction Spending: Slower 1st Quarter Rebound

Bottom Line: Construction spending was sharply lower than expected again in March. While these data are lagged more than other indicators and often subject to heavy revisions, this report suggests the first quarter saw only a modest rebound in construction activity amid a slowing trend in most sectors. While weather may have been a factor, the residential sector contracted even more than previously estimated in the 1st Quarter. Nonresidential activity saw a rebound but remained mired in slow growth on a trend basis. While there are some indications from other data of improvement in residential, the overall trend in construction remains a source of weakness for the economy. Construction Spending ROSE by 0.99% in February, compared with market expectations for a decrease of -0.2%. The January estimate was revised moderately higher from 1.31% to 2.46%, while the December estimate was revised moderately higher from -0.8% to 0.2%. Construction spending is now 1.1% ABOVE its year ago level. Residential Construction ROSE by 0.7%, Homebuilding is now 3.4% BELOW its year ago level. Nonresidential Construction FELL by 0.5%. Nonresidential construction growth is now 0.1% ABOVE its year ago level. Public Construction ROSE by 3.6%, and is now 11.5% ABOVE its year ago level.