Daily Economic Update: Construction Spending

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights construction spending and manufacturing activity.


  • The Nation’s manufacturing plants continue to show busy activity according to the latest industry survey of supply managers.  The ISM index remained above the 60 for the fourth straight month, to April.  An index of above 60 is considered solid and a bit of rarity.  An index of 50 is the neutral point separating expansion and contraction in the industry.
  • However, in looking at several components of the index, the industry expansion growth was the strongest in inventory accumulation and weaker in new orders.  Meanwhile, inflation at factories is picking up as 72 percent of respondents indicated higher prices while only 1 percent said lower prices.
  • Construction spending, which measures completion of building projects, made its first gain in four months with a gain of 1.4 percent in March.  Construction data has a long lag time and the latest figure reflects March activity.  Even with the latest gain, the current completion of private market construction projects remains at near 12 year lows.  Public construction is holding up much better at near record levels – partly due to stimulus money evidently still in the pipeline.
  • The latest manufacturing and construction activity points to a slight upgrade in GDP growth in the current quarter.  First quarter GDP growth of 1.8 percent was weak, but the second quarter could be something closer to 3.0 percent.

Lawrence Yun, PhD., Chief Economist and Senior Vice President

Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.

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