March Construction Spending Unexpectedly Declined by 0.9%

The Monthly Construction Spending Report for March was much worse than expected.

Total Construction

• Construction spending during March 2019 was estimated at a seasonally adjusted annual rate of $1,282.2 billion, 0.9 percent below the revised February estimate of $1,293.3 billion.
• The March figure is 0.8 percent below the March 2018 estimate of $1,293.1 billion.
• During the first three months of this year, construction spending amounted to $277.7 billion, 0.2 percent below the $278.3 billion for the same period in 2018.

Private Construction

• Spending on private construction was at a seasonally adjusted annual rate of $961.5 billion, 0.7 percent below the revised February estimate of $968.6 billion.
• Residential construction was at a seasonally adjusted annual rate of $500.9 billion in March, 1.8 percent below the revised February estimate of $510.1 billion.
• Nonresidential construction was at a seasonally adjusted annual rate of $460.6 billion in March, 0.5 percent above the revised February estimate of $458.5 billion.

Public Construction

• In March, the estimated seasonally adjusted annual rate of public construction spending was $320.7 billion, 1.3 percent below the revised February estimate of $324.7 billion.
• Educational construction was at a seasonally adjusted annual rate of $76.6 billion, 1.5 percent below the revised February estimate of $77.8 billion.
• Highway construction was at a seasonally adjusted annual rate of $104.5 billion, 1.9 percent below the revised February estimate of $106.5 billion.

The Econoday economists’ consensus estimate was for a 0.2% rise.

Revisions took February from +1.0% to +0.7% so economists effectively missed the mark by 1 whopping 1.5 percentage points.

Not the falloff in residential construction, down 1.8% from February. Housing is still weak despite lower interest rates.

These numbers will subtract from the second estimate of first-quarter GDP.

Mike “Mish” Shedlock