Highlights
Construction spending unexpectedly surged in April. Construction outlays advanced 0.8 percent after rebounding 0.4 percent in March. The April gain came in much better than the market estimate for a 0.8 percent decrease. The boost in outlays in April was led by a 1.8 percent increase in private nonresidential outlays with private residential construction spending rebounding 0.7 percent. Interestingly, the jump in residential was in excluding new homes. New one-family and new multifamily construction outlays fell 6.7 percent and 8.9 percent, respectively. Construction on existing homes jumped 8.9 percent after rising 0.8 percent in March, reflecting an increase in spending on improvements. The public construction outlays component, however, fell 1.8 percent, following a 2.8 percent boost the month before.

On a year-on-year basis, overall construction outlays improved to down 10.7 percent in April, from down 11.8 percent in March.

The latest construction outlays report will almost certainly be seen as a positive by equities although underlying strength really is not there. Strength was in a somewhat unreliable subcomponent for home improvement which is based on a small sample from the Consumer Expenditure Survey. But the markets like all of the headline numbers today-for personal income, construction outlays, and ISM manufacturing. While headline figures for personal income and construction overstate true strength, the ISM report appears to be real improvement. Equities rose sharply on each of these three reports.

Market Consensus before announcement
Construction spending in March rebounded unexpectedly but housing outlays are still on a downtrend. Construction outlays posted a 0.3 percent gain in March, following a 1.0 percent decrease the month before. The rebound was led by private nonresidential spending with the public component also advancing. However, the private residential component continued to fall. With housing starts falling 12.8 percent in April after an 8.5 percent decline the month before, we are likely to see weakness in at least the residential component of April construction outlays.

2009 Release Schedule

Released On: 1/5 2/2 3/2 4/1 5/4 6/1 7/1 8/3 9/1 10/1 11/2 12/1 Release For: Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct