Construction Spending Rose in March Nonresidential Gain Outweighs Another Residential Decline

Source: Economics Group of Wells Fargo Bank, N.A.

Summary

Total Spending Advances Despite Heightened Economic Uncertainty

  • Construction spending rose 0.3% during March, which translates to a 3.8% year-over-year gain.
  • The improvement in overall spending masks diverging trends between the residential and nonresidential sectors.
  • Residential outlays fell 0.2% during the month, the 10th straight monthly decline. Residential spending is running 9.8% below prior year levels.
  • Single-family activity continues to be a significant drag on total spending. Single-family spending dropped 0.8% in March, which equates to a 22.9% year-over-year decline.
  • Multifamily and home improvement outlays both rose during the month, increasing 0.4% and 0.3%, respectively.
  • Meanwhile, total nonresidential spending picked up 0.7% during the month, an 18.8% annual gain.
  • The upturn in the nonresidential category was driven by another strong gain in manufacturing project spending. The 4.6% monthly gain brings manufacturing outlays 62.3% above the pace registered in the same month last year. The remarkable rise largely reflects the build out of electric vehicle production supply chains as well as new semiconductor manufacturing facilities.
  • Lodging (0.4%), office (0.1%), educational (0.8%) and water supply (1.7%) also rose notably during the month.
  • Several nonresidential categories posted declines during the month. Transportation (-1.4%), commercial (-0.8%), highway & street (-0.1%) and power (-0.4%) all fell in March.

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