By Manuel Gutierrez, Consulting Economist to NKBA
Spending on public and private construction projects in April totaled $1.9 trillion, a 1.2 percent hike over March. Total spending was also higher than the previous year, increasing 7.2 percent.
Private construction projects, accounting for nearly eight in ten construction dollars, rose 1.3 percent in April to $1.5 trillion from April 2022. Meanwhile, public projects increased a more modest 1.1 percent to $408 billion. Residential construction – nearly all in the private sector – gained just 0.5 percent to $855 billion. Nonresidential construction projects in April also rose, but by a more robust 1.9 percent to $1.1 trillion compared with the previous month.
Below are some key highlights of the recently released construction data.
- Residential construction spending increased in April for the first time in nearly a year, after falling for eleven consecutive months. As a result, despite the month-over-month increase, spending was 9.2 percent lower than a year earlier. The year-over-year decline in residential construction was driven by single family housing; such a decline can also be seen in single family starts, which followed a declining trend over the last year.
- Single family construction declined 24.7 percent year-over-year to $362 billion. The other two residential segments — construction of multifamily houses and homeowner remodeling — increased, offsetting the decline in single family. Homeowner remodeling rose 2.1 percent YOY to $358 billion, very close to the value of new single family construction. Multifamily construction rose 24.9 percent YOY to $126 billion, accounting for 15 percent of the total residential market.
- Manufacturing buildings showed the largest gains in nonresidential construction spend, jumping 104.6 percent to $189 billion in April from a year earlier. The second largest annual increase in nonresidential construction spending was in lodging buildings (hotels, motels, etc.), which rose 41.6 percent YOY to $23 billion.
- Office buildings showed the biggest spending gain in the private construction segment, rising 14.6 percent to $84 billion from April 2022. Commercial buildings, which includes retail stores and restaurants, came in second with a 23.4 percent increase to $125 billion. Lastly, spending on educational buildings rose 19.3 percent to $22 billion, while spending on amusement buildings (theaters, theme parks, etc.) increased 12.5 percent, to $15 billion.
