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U.S. Construction Spending Edges Higher in March

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Total construction spending remained in a holding pattern in March as strong gains in apartment construction and modest growth in homebuilding and private nonresidential activity offset falling public outlays, according to a recent analysis of new Census Bureau data by the Associated General Contractors of America.

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“Overall construction spending has increased from a year ago but has stayed in a narrow range since December,” said Ken Simonson, the association's chief economist. “It is encouraging that spending remained level despite severe winter weather that may have delayed some projects, and the totals are likely to grow moving into spring.”

Construction put in place totaled $943 billion in March, 0.2% above the revised February total and matching the latest estimate for January. Spending in March was 8.4% higher than a year earlier.

Private residential construction spending increased by 0.5% in March to reach the highest rate since November 2008. The latest total topped the year-ago level by 16%. Single-family construction rose 0.2% in March and 13% year-over-year. Multifamily spending leaped 4.4% and 33%, respectively.

Private nonresidential spending edged up 0.2% for the month and 8.6% over 12 months. Most major categories increased from year-ago levels. The largest private segment, power construction—comprising work on oil and gas fields and pipelines as well as electricity projects—rose 2.8% over the year. The fastest-growing private type was communication construction, with a 34% gain since March 2013.

Public construction spending declined 0.6% for the month and 0.8% year-over-year, sinking to its lowest mark since November 2006. The largest public segment, highway and street construction, increased 8.5% from a year ago, but the second-biggest category, educational construction, slumped 5.3%.

“All of these trends are likely to continue,” Simonson predicted. “There appears to be plenty of demand for more apartments and many other categories of private nonresidential construction. Single-family homebuilding should remain above year-ago levels, although growing much more slowly as the year progresses. Public construction is likely to shrink further, based on what has been proposed or enacted in federal and state budgets.”

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