Finance

Construction March Spending Up 2% From Year-Earlier Level

Construction spending in March rose 2% year over year but edged down 0.6% from February’s level, the Commerce Dept. has reported.

Commerce’s U.S. Census Bureau reported on May 1 that the estimated value of construction put in place in March totaled an annual rate of $966.6 billion, a 2% uptick from March 2014’s rate.

It also was slightly below February’s rate of $972.9 billion. The rates are adjusted for seasonal variations.

The key residential sector fell 2.3% from March 2014’s level, to a $354.7-billion rate, and also was off 1.6% from February.

Nonresidential construction recorded a 4.7% increase, year over year, to $611.8 billion, but slipped 0.1% compared with February’s level.

Among large segments, the value of power projects completed in March dropped 15.7% versus March 2014, to $89.4 billion and also declined 0.8% from February.

The highway and street sector was down 5.3% from its year-earlier rate, to $78.3 billion and was 2.4% below the February rate.

Brighter spots included offices, which jumped 19.8%, year over year, to $49.9 billion and increased 2.2% from February; and lodging, which surged 22% from March 2014 and rose 5.2% from February.

Total private construction posted a 2.9% gain, year over year, but declined 0.3% from February, reported the Census Bureau

Public construction was weaker, dipping 0.3% from the year-earlier level and falling 1.5% compared with February.

Looking ahead, Ken Simonson, Associated General Contractors of America chief economist, said: "Current indications suggest private nonresidential construction and multifamily housing will continue to grow throughout the year. But funding for infrastructure is in jeopardy, which threatens to hold down public construction." The major unresolved public-works issue is the May 30 expiration of legislation authorizing the federal highway and transit programs.

Anirban Basu, Associated Builders and Contractors chief economist, said, "Up until six months ago, the U.S. economy was manifesting surging momentum, but the last six months have been disappointing."

Real Gross Domestic Product rose at an annual rate of only 0.2% for the first quarter, according to the "advance" estimate that Commerce's Bureau of Economic Analysis released on April 29.

ABC focuses on nonresidential construction and Basu noted that spending in that sector has fallen in January, February and March. He added, "Last year also got off to a hobbled start, but the the economy still managed to expand 2.4% in 2014. This year can still be better, including for nonresidential construction."

As ENR's former Washington Bureau Chief, Tom Ichniowski wrote about the federal government since the George H.W. Bush administration, and covered at least five major highway bills. A recognized expert on government policy on infrastructure and regulation, Tom is also a Baltimore native and Orioles fan who grew up rooting for Brooks and Frank Robinson. He is a graduate of Columbia College and Columbia’s graduate school of journalism, where he once used “unrelentless” in a headline.

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