Summary
Residential and Nonresidential Outlays Fall in April
Total construction spending declined 0.4% in April, the third straight monthly drop. The pullback in total overall outlays largely reflects the high interest rate environment, which continues to cut into residential demand and stand in the way of new nonresidential projects getting underway. Uncertainty regarding changes to trade policy and the potential economic impacts also weighed on total spending. There is now more visibility in regard to tariffs, and concerns of an acute contraction in economic activity have lessened, which should help bolster the project pipeline in the months ahead. That said, the improved outlook means the Federal Reserve will not be in a hurry to reduce the federal funds target rate. As such, elevated financing costs should remain a constraint on activity moving forward.
