“Looking past the volatile monthly reading, the overall trend looks a bit better with total construction spending up 4.5% from a year earlier”, according to Wells Fargo’s analysis of the Department of Commerce’s April construction spending report.
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Economists polled by Reuters had forecast construction spending rising 0.6 percent in April after a previously reported 0.3 percent increase in March.
Ted Wieseman of Morgan Stanley Research suggested that the April decline represented a payback from strong gains in prior months, which had been boosted by unusually mild winter weather.
In April, the estimated seasonally adjusted annual rate of public construction spending was $290.8 billion, 2.8 percent below the revised March estimate of $299.2 billion. Housing construction has been a bright spot for the economy in recent months. Highway construction was at a seasonally adjusted annual rate of $89.4 billion, 6.6 percent below the revised March estimate of $95.7 billion. Spending in the private residential construction sector hit a low of $230.5 billion in May 2009 before bouncing back to the current level around $420 billion.
Spending on both residential and non-residential construction slumped by 1.5 percent to rates of $439.7 billion and $403.5 billion, respectively. “Another positive sign is that today’s report is in contrast to housing starts, which showed an increase in single- and multifamily starts and permits in April”.
The decline in nonresidential construction stemmed from a drop of 2.1 percent in construction of hotels and motels and a 3.6 percent fall in the category that includes shopping centers. Federal government construction spending slipped 0.2 percent.
Building spending tumbled in May, due simply to some decrease in residential investing, the Commerce Office stated Friday. Educational construction was at a seasonally adjusted annual rate of $70 billion, 2.5 percent below the revised March estimate of $71.8 billion.
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The home construction boom peaked in 2006.
