The dollar value of construction spending in March is up 0.3 percent from February after a revision lower to down 0.3 percent in February. The increase is above the consensus of up 0.1 percent in an Econoday survey. Construction spending is up 3.8 percent compared to a year earlier. Total residential spending is down 0.2 percent in March from the prior month and up 0.7 percent for nonresidential construction.

Total private spending on residential construction is down 0.2 in March from February due to a 0.8 percent decline in single-family home building. However, spending on multi-unit construction is up 0.4 percent and up 0.3 percent on home improvement (total private residential spending less single- and multi-unit spending). The single-family sector for new homes continues to lag the multi-unit segment. At a time of higher mortgage rates, multi-units are more affordable entry points for first-time home buyers and/or renters who are looking to lock in monthly housing costs. Current mortgage holders are opting to renovate and repair rather than up- or downgrade their current units.

Among nonresidential construction, spending on manufacturing properties continues strong with a 4.6 percent month-over-month increase in March and a big 62.5 percent rise from a year earlier.

Public construction is up 0.2 percent in March from February and up 15.0 percent from a year earlier. Some of this is higher costs for construction, but some is investment in infrastructure. However, the large highway and streets sector shows spending down 0.1 percent month-over-month, although it is up 21.4 percent compared to March 2022.

Flat month in and month out, construction spending for March is expected to edge 0.1 percent higher following February's 0.1 percent decline. The flat headline masks nine months of consecutive contraction in residential spending and gains in eight of the last nine months for nonresidential spending.

The dollar value of new construction activity on residential, non-residential, and public projects. Data are available in nominal and real (inflation-adjusted) dollars.

Construction spending has a direct bearing on stocks, bonds and commodities because it is a part of the economy that is affected by interest rates, business cash flow and even federal fiscal policy. In a more specific sense, trends in the construction data carry valuable clues for the stocks of home builders and large-scale construction contractors. Commodity prices such as lumber are also very sensitive to housing industry trends.

Businesses only put money into the construction of new factories or offices when they are confident that demand is strong enough to justify the expansion. The same goes for individuals making the investment in a home.

A portion of construction spending is related to government projects such as education buildings as well a highways and streets. While investors are more concerned with private construction spending, the government projects put money in the hands of laborers who then have more money to spend on goods and services.

On a technical note, construction outlays for private residential, private nonresidential, and government are key inputs into three components of GDP--residential investment, nonresidential structures investment, and the structures portion of government expenditures.

That is why construction spending is a good indicator of the economy's momentum.