Total U.S. construction spending continued to perform well in March, especially in the federal sector. Census Bureau non-seasonally adjusted (NSA), constant dollar CPIP data showed that March’s twelve month total, (12MT) construction expenditures grew by 3.8% year on year (y/y), to $1241.9billion (B). On a 12MT basis, private expenditures advanced 5.0% y/y, while, State & Local contracted by 0.5% y/y. Non-residential 12MT CPIP increased by 1.5%, 12MT y/y to $574.6B.
Total Construction: Table 1 presents CPIP data for total construction for both 3 moving total and 12 month moving total y/y metrics. Momentum, defined as 3MT minus 12MT is also shown. Momentum provides market direction with green indicating stronger activity and red indicating slowing activity. Private construction accounted for 76.5% of the total three months expenditures ending in March. State & local spending accounted for 21.0%, the remaining 2.5% was for federally financed projects. The private sector posted 4.5% and 5.0% growth for 3MT and 12MT y/y comparisons resulting in negative 0.6% momentum for the month of February.
Single family residential construction recorded 10.5% growth on a 3MT basis, slightly stronger than the 10.4%, 12MT y/y score, resulting in a positive momentum of 0.1%.Nationally there is a significant demand for single family residential homes causing construction to increase. A strong job market, low interest rates and pent-up demand is driving demand. This trend is expected to continue throughout 2018.
On 12MT basis, State and Local total construction was in the red, down 0.5%. However on a 3MT month y/y basis, State and Local total construction recorded a 3.6% increase in spending. This was the fifth month in a row of positive growth on a 3MT y/y basis, after a string of 17 months of negative numbers. In a further encouraging sign, momentum was +4.1%. Federal outlays recorded an increase of 10.0% on a 12MT basis and a much stronger +36.8% on a 3MT comparison.
Non-residential Construction: Table 2 shows the breakdown of non-residential construction (NRC). The overall growth rate was +3.5% on a 3MT y/y basis and +1.5% on a 12MT y/y comparison resulting in an upward 2.0% momentum.
The growth rate of private NRC was +2.9% for the 3MT ending March, more than the rolling 12MT value of +1.3%, leading to a positive momentum score of 1.6%. This is the second positive growth rate for the 3MT y/y metric after a run of four month in a row that the 3MT y/y growth rate has been negative, an encouraging turn-a-round.
State and local expenditures were positive for both 3MT and 12MT metrics. The 3MT y/y increase was +5.3%, stronger than the 2.0%, 12MT y/y growth giving rise to positive momentum of +3.3%. March’s positive percentage posting marks seven consecutive months of growth on 3MT y/y basis and six months in a row of positive percentage growth on a 12MT y/y comparison.
Looking at the project categories within non-residential buildings, most are exhibiting strong growth while others are declining. Educational, Commercial, Apartments, Recreation and Transportation Terminals, Lodging, and Public Safety construction all recorded positive growth on both 3MT and 12MT y/y metrics.
Sectors that are recording contracting expenditures on both rolling 3MT and 12MT y/y comparisons, include: manufacturing buildings, office buildings, and religious structures.
Overall the construction market continues to perform well exhibiting continuing y/y growth from the private sector. Public sector spending meanwhile has turned from a weakness to a strength over the past six months.
At Gerdau we monitor the CPIP numbers every month to keep you, our customers informed on the health of the U.S. construction market.