Construction spending slipped in March from upwardly revised February totals but increased modestly from a year earlier, according to an analysis by the Associated General Contractors of America.
Association officials cautioned that those spending gains could be at risk if Congress and the Obama administration fail to address highway funding shortfalls that threaten to undermine the sector’s recovery.
“The first quarter as a whole was positive for all major categories of construction despite a weak March for residential and public construction spending,” said Ken Simonson, the association's chief economist. “Current indications suggest private nonresidential construction and multifamily housing will continue to grow throughout the year. But funding for infrastructure is in jeopardy, which threatens to hold down public construction.”
Construction spending in March totaled $967 billion at a seasonally adjusted annual rate, 0.6 percent lower than the upwardly revised February figure but 2.0 percent higher than in March 2014, Simonson said. For the first three months of 2015 combined, spending exceeded the first-quarter 2014 total by 3.2 percent.
Simonson observed that the largest private nonresidential component, power construction, declined 16 percent in the first quarter. However, other large private nonresidential segments rose steeply in the period: manufacturing construction, up 35 percent from the first three months of 2014; commercial (retail, warehouse and farm), up 17 percent; and office, up 23 percent. In contrast, the biggest public segments had year-to-date declines: highway and street construction, down 2.9 percent; and educational, down 1.1 percent.