The Week Ahead: Great Expectations for Construction Spending

Construction spending bounced back in March after experiencing the largest decline in three months and raising unexpected concerns among market watchers in the industry. Now, the industry is awaiting the new spending numbers to see if those previous gains spilled into April.

The U.S. Census Bureau of the Department of Commerce  reported that construction spending for March was estimated at a seasonally adjusted annual rate of $1,137.5 billion, 0.3 percent higher than February’s estimate of $1,133.6 billion. Year-over-year, construction spending was up 8.0 percent from the March 2015 estimate of $1,052.9 billion.

Construction spending totaled $240.4 billion for the first 3 months of this year, up 9.1 percent from the $220.3 billion reported for the same period in 2015.

The National Association of Home Builders (NAHB) reported Monday that it “anticipates accelerating growth for single-family spending in 2016.”

Employment and GDP Under Heavy Scrutiny

Market participants may be watching the Bureau of Labor Statistics’ May employment situation a little more closely than usual when it is released on the morning of Friday, June 3, since this will be the last one released before the next Federal Open Market Committee (FOMC) meeting on June 14-15.

The April jobs summary was largely a disappointment, reporting just 160,000 jobs added along with downward revisions for both February and March. Adding to that was the weak GDP growth in the advance first quarter estimate released in late April (0.5 percent), which caused many analysts to downgrade their economic forecasts for the remainder of 2016.

Here is the lineup for the week:

Tuesday, May 31

S&P Case-Shiller Home Price Index
9:00 A.M. EST

Wednesday, June 1

U.S. Census Bureau Construction Spending
10:00 A.M. EST

Federal Reserve Beige Book
2:00 P.M. EST

Friday, June 3

Bureau of Labor Statitics Employment Situation
8:30 A.M. EST