Construction Spending Flat in April

The U.S. Census Bureau estimated that construction spending during April 2019 was at a seasonally adjusted annual rate of $1,298.5 billion, nearly the same as (±1.3%) the revised March estimate of $1,299.2 billion. 

The April figure is 1.2% (±1.5%) below the April 2018 estimate of $1,314.7 billion. During the first four months of this year, construction spending amounted to $386.1 billion, 0.2 percent (±1.3 percent) above the $385.5 billion for the same period in 2018.

In April, the estimated seasonally adjusted annual rate of public construction spending was $344.6 billion, 4.8% (±2.5%) above the revised March estimate of $328.7 billion. 

  • Highway construction was at a seasonally adjusted annual rate of $114.3 billion, 6.8% (±8.6%) above the revised March estimate of $107.0 billion.
  • Educational construction was at a seasonally adjusted annual rate of $80.0 billion, 2.1% (±2.6%) above the revised March estimate of $78.3 billion

Spending on private construction was at a seasonally adjusted annual rate of $954.0 billion, 1.7% (±1.0%) below the revised March estimate of $970.4 billion. 

  • Residential construction was at a seasonally adjusted annual rate of $499.3 billion in April, 0.6% (±1.3%) below the revised March estimate of $502.4 billion. 
  • Nonresidential construction was at a seasonally adjusted annual rate of  $454.7 billion in April, 2.9% (±1.0%) below the revised March estimate of $468.0 billion. 

“Overall spending was flat in April, but that masks significant differences among the various construction sectors for both the latest month and the first four months of 2019 combined,” said Ken Simonson, the Associated General Contractors of America’s chief economist. “The year-to-date totals, which are a more reliable indicator of underlying trends than are initial monthly estimates, show activity is still increasing for most project types other than single-family homebuilding.”

Association officials said that ever-changing tariffs have made it difficult for contractors to estimate project costs accurately, while retaliatory actions by U.S. trading partners cut into demand for construction by exporters, their suppliers and their logistics and transportation partners. The officials urged President Trump to end tariffs that are harming U.S. contractors and other businesses, and to avoid using tariffs as a weapon for immigration or other policies. They added that the latest round of threatened tariffs is coming at time when private-sector demand for construction is essentially flat.

“These tariffs are doing much more harm than good,” said Stephen E. Sandherr, the association’s chief executive officer. “They drive up construction costs, cause uncertainty for businesses that need to know their costs before investing in projects, and damage U.S. competitiveness.”

“Today’s data release shows that nonresidential construction spending remains vigorous in America,” said Associated Builders and Contractors Chief Economist Anirban Basu. “While April’s monthly nonresidential construction spending growth of 0.3% appears lackluster, this was largely the result of a sizeable upward revision to March construction spending figures.

“Today’s data release also indicates that the baton has now been fully passed,” said Basu. “Earlier in the recovery, nonresidential construction spending growth was primarily driven by private segments. Low interest rates and abundant liquidity helped fuel private investment in hotels, data centers, casinos, fulfillment centers and other forms of private construction. But over the past year, private nonresidential construction spending has barely budged. Meanwhile, public residential spending is up 15.4% and April’s spending growth was led by water supply and highway/street.

“Given current levels of backlog, which expanded to 9.5 months in March 2019, nonresidential construction spending should remain elevated,” said Basu. “That said, risks of recession in 2020 are rapidly rising, which has the potential to reduce construction activity in 2021 and/or 2022.”

Related posts