Economy Watch: Construction Spending Edges Down in March

Construction in the commercial sector slipped 2.3 percent from the previous month, but the silver lining is a 8.1 percent gain compared to March 2017, the Census Bureau reported.

Construction spending during March came in at an annualized rate of $1,284.7 billion, or 1.7 percent below the revised February total, according the Census Bureau reported on Tuesday. However, the March figure is 3.6 percent above the March 2017 construction spending total. Spending on private construction projects in March was 2.1 percent below the revised February total, while the rate of construction spending on public-sector projects was almost the same.

Residential construction spending was down for the month by 3.5 percent, but up for the year by 5.3 percent. Multifamily construction spending was down 8.2 percent for the year, while spending on single-family housing construction was up 9.7 percent.

In the nonresidential sector, almost every major property type was down for the month except for office, which was up 0.7 percent in March. For the year, office construction spending grew a healthy 5 percent.

What the bureau calls “commercial,” which includes industrial properties, is currently the darling of developers who believe e-commerce will drive further demand. Nevertheless, spending on “commercial” construction projects was down for the month in March by 2.3 percent. But such construction was up by a sizable 8.1 percent compared with a year earlier.

Spending on lodging construction was down slightly for the month in March, off 0.2 percent. For the year, lodging construction was up more than any other major property type: 11.8 percent, presumably in response to demand, since hotels are enjoying high occupancies.