The value of construction put in place is up 1.2 percent in April from March after an unrevised up 0.3 percent in March from February. The increase is well above the consensus of up 0.2 percent in an Econoday survey of forecasters. The rise reflects not only a solid month-over-month gain of 1.9 percent in April for nonresidential construction, but a 0.4 percent increase in residential construction, the first since May 2022. Although the housing market is significantly weaker after a rapid increase in mortgage rates, limited stocks of existing homes means there is an opportunity for homebuilders to meet some of the demand.

Private residential construction is up 0.5 percent in April from March. While construction of single-family homes continued to decline at down 0.8 percent from the previous month, multi-unit construction is up 0.6 percent. The dollar value of construction of single-family homes has not seen a gain since April 2022. However, multi-units which are generally a more appealing price point and/or affordable while mortgage rates are higher have now seen nine straight months of increases. Homeowners are also spending on home renovation and repair. This calculation total private nonresidential less spending on single- and multi- unit building is up 1.7 percent in April from March. It suggests that current homeowners are not inclined to leave their property while they have locked-in monthly housing costs related to low mortgage rates, and are willing to reinvest where they currently own.

Nonresidential spending includes a 8.6 percent increase for the manufacturing sector, or about 18 percent of the total for nonresidential. Manufacturers may be using the period of slower growth to retool, repair, automate, and upgrade.

Total public construction is up 1.1 percent in April from March and includes increases of 4.3 percent for office space, 3.5 percent for health care, 2.4 percent for power, and 1.3 percent for highways and streets.

Construction spending for April is expected to edge 0.2 percent higher following March's 0.3 percent rise. Flat headlines have masked ten months of consecutive contraction in residential spending and, in sharp contrast, gains in nine of the last ten reports 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.