US construction spending tumbled in April
U.S. construction spending fell in April by the biggest amount in five years, dragged by declines in housing, commercial construction and spending on government projects.
Construction spending dropped 1.8 percent in April after a 1.5 percent gain in March, the Commerce Department reported Wednesday. It was the biggest monthly decline since a 4.1 percent plunge in January 2011.
Jennifer Lee, senior economist at BMO Capital Markets, cautioned against reading too much into one negative month for construction, noting that the data can be volatile.
"This series is prone to big revisions," she said, noting that the March increase of 1.5 percent had initially been reported as a much smaller rise of 0.3 percent.
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.
Spending on housing fell 1.5 percent, nonresidential building was also down 1.5 percent and spending on government projects declined 2.8 percent.
The drop in overall construction was unexpected. Private economists had been forecasting a gain of around 0.6 percent. Housing construction has been a bright spot for the economy in recent months. In the first quarter, residential investment grew at a sizzling annual rate of 17.2 percent.
The April report showed widespread declines. The fall in housing reflected a 3.1 percent drop in apartment construction, a volatile category, and no change in the level of activity for single-family construction.
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. Construction of office buildings rose by 1.6 percent during the month, but spending on factories fell by 1.5 percent.
Spending on state and local government projects fell 3 percent, and spending by the federal government dropping by 0.2 percent.
The declines left total construction at a seasonally adjusted annual rate of $1.13 trillion in April, up 4.5 percent from a year ago.
The home construction boom peaked in 2006. But after the housing bubble burst, construction activity fell for the next five years but has been rising since 2012.
(Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)