Construction Spending Continues Strong Growth

According to the Census Bureau, the value of construction put in place in March 2014 was $69,142 (millions of real dollars). Compared to one year ago, spending in March was up 7.1%. This is the third month in a row that construction spending has increased more than 7.0% compared to one year ago. The rate of growth to start 2014 is virtually the strongest period of growth in real construction spending since the recovery began in early 2012. The annual rate of growth has accelerated each of the last three months. So, while the residential housing market continues to slow, total construction spending is accelerating.

Real construction spending is linked closely to real consumer spending. Real consumer spending has been growing at a marginally faster rate since September rate. However, relatively small changes in consumer spending lead to noticeably larger changes in construction spending. Therefore, construction spending shold see accelerating growth for at least the next few months. And, if incomes continue to grow faster which will push spending to continue its accelerating growth, then construction spending could see accelerating growth into the fall of 2014. 

Real construction spending is a good leading indicator for construction materials, hardware, and HVAC industrial production.