Residential and Public Sector Construction Spending is Up, Non-Residential Building is Down Again

The Department of Commerce's U.S. Census Bureau reported construction spending for April 2014 a few days ago. April's figure of seasonally-adjusted annual rate (SAAR) is $953.5 billion, up 0.2% from $951.6 billion in March. Modest improvement, but the details are more telling. The SAAR for private construction was essentially flat at $686.5 billion, down a hair from $686.8 billion in March. Public construction, which has been on a long downward slide, ticked up 0.8% to $267 billion in April, above March's figure of $264.8 billion. I will come back to public-sector spending in a separate post in the next day or two because it's an interesting topic these days. 

The increase in public sector construction spending is good for the construction industry. As Bill McBride from the Calculated Risk shows in the above figure, residential is also health. There are even more details to highlight, though.

Non-residential spending is down for the fifth month in a row, decreasing 1% in March after a 1.3% drop in February. Not necessarily a good sign. Fortunately, the residential market, combined with the public sector, picked up the slack. Residential was up 0.7% in March after being down 0.3% in February. The single-family housing starts were up 0.8% in March, but the bigger story is that the multi-family went bonkers and was up 3.2% in March after being up 2.8% in February. This makes sense to northern Californians as the multi-family market has been hot for some time, particularly in the Bay Area. 

A bit of a mixed bag, but so long as the overall spending is increasing, the construction industry as a whole will continue to strengthen.