Outlays for construction fell 2.9% in April compared to March, but that was less than anticipated by the Wells Fargo Economics Group, who commented, "The construction industry, much of which was deemed essential during lockdowns, is likely holding up a little bit better than other parts of the economy," and that the decline "was not even the largest drop in construction spending over the past two years," because October 2018 tallied a 3.2% decrease month-to-month.

 
Plus, a great start to the year means that construction spending through the first four months of 2020 is better than the same period in 2019 by 7.1%.

Residential outlays took the biggest hit (-4.5%) with the multifamily subcategory being off 9.1%, and single-family falling 6.6%, which may see a rebound since new home sales rose 0.6% in April.

"On the other hand, we expect more prolonged weakness in multifamily spending," the group stated. "COVID-19 has thus far had an acute impact on dense urban areas where the bulk of new multifamily development takes place, which may keep rental demand depressed for quite some time. While properties are holding up well on an operational basis, a torrent of new supply is set to hit the market over the next 18 months."

Public expenditures sank 2.5%, led by a 5.2% contraction in the highway & street subcategory. Nonresidential spending only dropped 1.8% as three subcategories actually posted gains: manufacturing (+0.3%), conservation & development (+1.7%) and sewage & waste disposal (+1.6%).

"That's not to say construction was left unscathed by measures taken to contain the pandemic, and other indicators point to a more severe pullback in activity," concluded the group. "Construction firms slashed payrolls by nearly one million jobs during April, which makes us think some downward revisions may be forthcoming."