There was a surprising uptick in construction spending in March, although residential construction was still slightly off from the previous month.
This morning, the Commerce Department released its preliminary estimates on the value of construction (including infrastructure) put in place for March. The month's seasonally adjusted annualized rate was $847.3 billion, 0.2% higher than February’s revised total of $845.5 billion. That represented the first increase in that value in five months, and the construction sector outperformed the expectations of economists polled by Thomson Reuters, who had anticipated a marginal monthly decline.
However, Commerce estimates that the boost in spending came primarily from public construction activities, which rose 2.3% in March over February. Conversely, the value of private-sector construction fell to its lowest level since January 1999. Total construction spending in March was also 12.3% below the same month a year ago, as was public construction portion of that spending, down 6.3%.
A reverse trend of sorts was evident in residential construction spending, which in March was down 1% from February, to a seasonally adjusted annual rate of $260.5 million, but up 1.6% over the same month in 2009. Residential construction spending was off in the first quarter of 2010, after two previous quarters of gains.
The annualized rate of private-sector residential construction in March, which accounted for $251.8 billion of the total value of residential put in place, was 0.9% below February and 15.3% down from March 2009. Over the past several months, a number of builders around the country accelerated their production in response to demand created by the impending expiration of the federal homebuyer tax credit. But their activities don’t seem to have made a big-enough dent to move the needle forward on overall spending for residential construction, at least according to the government’s tally.
John Caulfield is senior editor with BUILDER magazine.