Non-Residential Construction Supports Low Growth as Housing Remains Weak

Construction spending rose +.2% MoM in March, as expected. But, February saw a huge revision higher from +.3% MoM to +1.5% MoM. Since March of 2006 though, construction spending has fallen 2% YoY. Public spending on schools and highways helped support construction spending last month.

As expected, residential construction continues to contract, falling -1% MoM and -14.2% YoY. It has fallen for 11 of the past 12 months. But the weakness in housing is offset by non-residential construction which expanded +1.4% MoM and +13.2% YoY.

Private construction rose a modest +.2% MoM, but is down -5.1% YoY. Public construction rebounded in March to grow +.4% MoM and 9% YoY. Federal spending has declined this year by -10.6% YoY, but state and local has offset that weakness by increasing 10.6% YoY.

Construction spending was a very small net positive to GDP growth in the first quarter, due to non-residential expenditures on factories, offices, hotels, and public buildings such as schools.