Construction Spending: Declines Sharply

Bottom Line: Construction fell sharply in April, compared to market expectations for a small gain. However, the prior two months' estimates were revised higher. Homebuilding and non-residential construction fell moderately and the year-over-year growth has slowed in recent months. Finally, public construction fell sharply but is still modestly above its year ago levels. Overall, construction spending is now growing moderately on a year-over year basis but the pace of increase has slowed recently. Construction Spending FELL by 1.8% in April, compared with market expectations for an increase of 0.6%. The March estimate was revised moderately higher from 0.3 to 1.5, while the February, estimate was revised modestly higher from 1.0 to 1.4. Construction spending is now 4.5% ABOVE its year ago level but still 5.9% below its March 2006 peak. Residential Construction FELL by 1.5%. Despite this decline, homebuilding has been on a slowly improving trend and is 8.0% ABOVE its year ago level. Nonresidential Construction FELL by 1.5%. Despite this decline, nonresidential construction year-over-year growth has been improving slowly and is now 3.4% ABOVE its year ago level. Public Construction FELL by 2.8% and is now 1.2% ABOVE its year ago level. Public construction had been on a declining trend until March 2014 but is now increasing modestly.