US Construction Spending Increases 0.3% In April

WASHINGTON (Dow Jones)--Spending on construction projects rose modestly in April, as a jump in private-sector residential activity outweighed a drop-off in public construction.

Construction spending increased by 0.3% in April to a seasonally adjusted annual rate of $820.66 billion, the Commerce Department said Friday.

The April gain, which was in line with economists' expectations, followed an upwardly revised 0.3% increase the month before. March spending was initially estimated to have increased 0.1%.

Total private-sector spending on construction increased 1.2% in April to $549.67 billion, its highest level since October 2009.

However, public construction slid 1.4% to $270.99 billion, its lowest level since December 2006. Government spending on education, public safety and sewage all declined during the month.

Federal government spending fell 5.0% to $26.39 billion in April.

Spending by state and local governments declined 1.0%, reaching the lowest level since November 2006 at $244.61 billion. Municipalities remain under pressure to reduce spending amid weak tax receipts and slowing aid from Washington.

Meanwhile, private nonresidential construction--including lodging and manufacturing--slipped 0.2% to $293.58 billion.

Declining spending on nonresidential structures was a drag on overall economic growth during the first three months of the year. But the drop in investment on structures was lower than initially expected when Commerce revised its first-quarter estimate of gross domestic product on Thursday, to 3.3% from an initial estimate for a 12.0% slump.

The monthly employment report, released earlier Friday, showed that the construction industry shed 28,000 jobs in May.

However, the GDP data indicated stronger-than-expected home building last quarter.

Friday's construction report showed spending on residential construction increased by 2.6%, with private residential spending climbing 2.8%.

A large stock pile of cheap, foreclosed homes has made for new properties, which tend to be more expensive, less attractive. But recent reports indicate prices may be reaching their bottom, suggesting that overall demand may be starting to grow.

The Commerce Department report on construction spending can be found at http://www.census.gov/const/C30/release.pdf.

-By Tom Barkley and Eric Morath,
Dow Jones Newswires; 202-862-9275; tom.barkley@dowjones.com
(END) Dow Jones Newswires

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