Manufacturing Construction Spending Fell in April

By June 4, 2013Economy

The Census Bureau reported the total construction spending rose 0.4 percent in April. This was below the 0.8 percent consensus estimate, with a decline in residential construction activity and reduced spending from manufacturers. Private sector housing construction spending declined 0.2 percent for the month but has increased a whopping 18.3 percent since April 2012. This pullback mirrors the decline in new housing starts reported a couple weeks ago. Despite April’s decrease, though, residential construction remains one of the brighter spots in the economy.

Meanwhile, manufacturing construction spending fell 2.6 percent, down from an annualized $50.2 billion in March to $48.9 billion in April. Year-over-year, manufacturers have added just over $1 billion to their construction spending activity put in place, a gain of 2.2 percent. Still, this is not totally a fair way of presenting the annual change, as there has been a high degree of volatility in this figure over much of that time. The average for 2012 was $48.00 billion and peaked at $52.2 billion in December.

Overall private, nonresidential activity rose 2.2 percent, the first increase since December. The largest gain was in the power sector, with construction activity in that segment up 10.8 percent. Year-over-year growth in that power industry, though, was down 2.8 percent. Other nonresidential areas with higher construction spending in April included amusement and recreational (up 3.5 percent), educational (up 2.9 percent), and transportation (up 1.5 percent) entities. In addition to manufacturing, there was reduced monthly construction investment among religious (down 11.5 percent), communication (down 4.1 percent), and office (down 2.1 percent) institutions.

Meanwhile, public construction spending was down 1.2 percent in April and 5.1 percent year-over-year. Dollars spent on public residential projects were off 5.4 percent for the month, with nonresidential spending down 1.1 percent. The largest monthly gains were in commercial (up 8.2 percent), sewage and waste disposal (up 6.8 percent), and public safety (up 5.5 percent) projects. In contrast, the power (down 13.3 percent), conservation and development (down 5.7 percent), and educational (down 4.4 percent) sectors had the greatest declines in public construction spending in April.

Chad Moutray is chief economist, National Association of Manufacturers.


Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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