Courtesy of Mish.
Reported construction spending for March (yes we are still looking at first quarter data), was -0.2%. However, the Census Department revised February construction spending from 0.8% to 1.8%.
These construction reports are so volatile and so frequently revised they are nearly worthless except for entertainment purposes. Nonetheless, let’s have a closer look, including a detailed look weather-related effects.
Construction Spending Volatility
Bloomberg Econoday comments on construction volatility.
Data on construction spending are subject to unusual volatility, evident in today’s report which came in far below expectations, at minus 0.2 percent vs Econoday’s consensus for a 0.5 percent gain. These results for March, however, are offset by a 1.0 percentage point upward revision to February which now stands at a very strong 1.8 percent.
March’s weakness is tied to a sharp 1.3 percent decline in the private nonresidential component, where spending was especially weak for commercial units as well as office units. Public spending was also weak with educational building down for a 2nd straight month. The positives in the report are in housing with multi-family units extending their strong run with a 2.0 percent monthly gain, supported by a gain for single-family units and another strong month for home improvements.
It’s hard to get a gauge on this report because of its revisions and volatility, and the general weakness in nonresidential construction contrasts with the enormous strength of investment in nonresidential structures in Friday’s first-quarter GDP report. The housing side is more clear with gains backed up by strength in underlying permits and strong demand for new housing. Next up on the construction sector will be Friday’s employment report and construction payrolls which have been mostly solid so far this year.
March Revisions vs February
Revision Synopsis
- December: Unrevised at 1,188,941 Hooray!
- January: Revised from 1,183,840 to 1,198,779
- February: Revised from 1,192,822 to 1,220,735
The January revision from -0.4 to +1.3 was even larger than the positive revision in February.
If we just compare February as reported in February to February as reported in March, the percentage increase is 2.3%, not reported 1.8% as the revisions build on each other.
