Total construction spending increased 0.3 percent in April 2012, reaching $820.7 billion at a seasonally adjusted annual rate (SAAR) thanks to a 2.6% increase in residential construction. The April increase matched what the U.S. Census Bureau reported in March. Overall construction spending is up 7.3 percent year-to-date not seasonally adjusted.
Key construction-spending numbers:
- Total residential construction spending was up 2.6% to $262.3 billion; year-to-date spending is up 5.7%
- Nonresidential building construction dropped 0.9% in April; year-to-date spending is up 10.1%
- Heavy engineering (non-building) construction spending was down 0.5%; year-to-date spending is up 5.7%
- Public construction spending fell 1.4%; year-to-date spending was down 2.8%
- Private construction spending was up 1.2%; year-to-date spending was up 12.9%
A mild winter and warm spring helped work start early, which may have led to some overstatement of early-year data due to the seasonal adjustment process, according to Reed Construction Data.
For the general economy, Reed pointed out first-quarter real (inflation adjusted) growth in gross domestic product (GDP) was revised down to 1.9 percent (SAAR), and the May unemployment rate rose to 8.2 percent.
Developments in Europe still remain a threat to the U.S. economy. Reed Construction Data says, "A deep European recession would be a drag on U.S. growth, but it is a default on European debt that carries the greatest risk due to the impact on the U.S. and world financial markets."
Political issues in Washington are also a concern, with the inability to compromise on annual funding bills being a major factor.
Reed Construction Data forecasts total construction spending to increase 5.2 percent in 2012 and 6 percent in 2013, assuming there will not be another recession.