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Construction Spending Up 0.2% in March

0 143 Market Intelligence

Total construction spending increased 0.2% in March and spending was revised up sharply for earlier this winter. This is the best construction spending report in many months. The monthly gain was 0.6% excluding another large drop in residential remodeling spending which seems clearly off-trend with the rest of the housing market. The small spending gain was matched by 26,000 added construction jobs, says Reed Construction Data chief economist Jim Haughey.

Total construction spending increased 0.2% in March and spending was revised up sharply for earlier this winter. This is the best construction spending report in many months. The monthly gain was 0.6% excluding another large drop in residential remodeling spending which seems clearly off-trend with the rest of the housing market. The small spending gain was matched by 26,000 added construction jobs. 14,000 additional construction hires in April suggest that construction spending rose again in April. However, the expected spending trend during the spring and summer is for approximately no change. No sustained improvement is expected until late in the year.

The Reed Construction Data forecast has been revised down to project an 8.8% drop in 2010 and then a 6.7% recovery in 2011. The downward revision is largely to recognize the recent unexpectedly large declines in spending for K-12 schools and multi family housing.

U.S. Total Construction Spending
(billions of U.S. current dollars – annual figures)

  Actual Forecast
  2005 2006 2007 2008 2009 2010 2011
New Residential (% change 485.0 476.9 362.3 237.5 143.2 147.3 177.95
is year vs previous year) 15.1% -1.7% -24.0% -34.4% -39.7% 2.9% 20.8%
Residential Improvements* 131.1 145.9 140.1 121.0 117.6 121.6 124.725
  13.4% 11.2% -3.9% -13.6% -2.9% 0.0% 2.5%
Non-residential Building 303.2 342.0 407.7 445.0 403.0 320.1 338.3625
  7.0% 12.8% 19.2% 9.1% -9.4% -20.6% 5.7%
Non-building 181.4 205.0 240.9 268.2 273.5 265.7 270.825
   (heavy engineering) 5.4% 13.0% 17.5% 11.3% 2.0% -2.9% 1.9%
Total 1100.8 1169.8 1151.1 1071.8 937.4 854.7 911.8625
  10.9% 6.3% -1.6% -6.9% -12.5% -8.8% 6.7%

*Residential Improvements include remodeling, renovation and replacement work.
Actuals: U.S. Census Bureau, Department of Commerce.
Forecasts and table: Reed Construction Data.

by Jim Haughey

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