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Construction spending in America rose in March over February, according to the latest "value put in place" construction statistics from the U.S. Census Bureau. But a major trade group for the construction industry said the COVID-19 slide has begun.
In its report titled "Monthly Construction Spending, March 2020," the Census Bureau estimated March construction spending at $1.361 trillion annualized and seasonally adjusted. That's up 0.9% from the $1.348 trillion estimated in February and 4.7% above March 2019's annualized rate of $1.299 trillion.
For the first three months of the year, construction spending was put at $297.0 billion, 6.7% above the $278.5 billion recorded for the first quarter of 2019.
Residential construction up, nonresidential already sliding
Private construction accounts for the majority of that spending and was up 0.7% from February to March at an annualized, seasonally adjusted rate of $1.013 trillion. Residential construction accounted for $550.3 billion of that, up 2.3% from February, while nonresidential construction was at $462.3 billion in March, down 1.3% from the month before.
The residential construction figure does not reflect the collapse in housing starts and sales captured in census reports and reported by major homebuilders in late March and into April. The nonresidential construction decline already is reflecting a recession that's building as joblessness soars and the economy reels.
There's more to come.
Construction cancellations piling up
Ken Simonson, chief economist for the Associated General Contractors of America, said his trade group's latest survey is finding project cancellations as far out as June or later.
"Unfortunately, these numbers are only the beginning of what seems sure to be a steep decline in construction as current projects finish and new work is canceled or postponed indefinitely," Simonson said.
Ten out of 11 private nonresidential construction categories in the Census Bureau's monthly report fell from February to March, communications construction being the sole exception. Simonson said that probably was the result of increased telecommunications construction to handle the soaring demand in videoconferencing as a result of the pandemic.
Crews hits the highways, but infrastructure overall dipping
Public construction was up an estimated 1.6% at $348 billion in March. Highway construction showed the strongest month-over-month growth, up 4.6% at a seasonally adjusted rate of $108.3 billion, compared with $103.5 billion in February, the Census Bureau said. Educational construction, at $80.9 billion, was down 0.3%.
"(This) probably reflected favorable weather and the ability of highway contractors to work longer hours on nearly deserted roads," said Simonson, the AGC economist. He foresees further declines in public construction, including transit projects and other infrastructure, "as state and local governments struggle to balance their budgets in the face of unbudgeted expenses and steep, unanticipated revenue decreases."
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