WASHINGTON (AP) — U.S. construction spending posted modest gains in April, driven by an uptick in home building and government construction that lifted total activity to the highest level in five years.
Construction spending rose 0.2 percent in April to a seasonally adjusted annual rate of $953.5 billion, the strongest performance since March 2009, the Commerce Department said Monday. The April increase was lower than economists had expected. But the government revised March activity higher to a 0.6 percent gain, up from an initial estimate of a 0.2 percent increase.
The small April improvement, combined with the strong gain in March, suggest that the construction industry is recovering from the harsh winter and will provide a boost to growth in the months ahead.
"This was mostly a good report," IHS Global Insight economists Stephanie Karol and Patrick Newport said in an analyst note. "Core construction, the piece of the report which affects GDP, advanced 0.6 percent, the largest gain since December."
The April figure marked the third straight increase after the weather pushed spending down 0.4 percent in January. Construction activity dragged the overall economy in the first quarter when gross domestic product actually shrank.
The overall economy contracted at an annual rate of 1 percent in the January-March quarter. Analysts estimate growth to recover to a rate of around 3.8 percent in the April-June period. The expectation is that strong gains in hiring will help lift consumer spending. Other sectors including construction should also bounce back.
Continue reading this story on the...