U.S. Construction Spending Unexpectedly FIat In April

by Ike Obudulu Posted on June 3rd, 2019

Construction spending in the U.S. came in virtually unchanged in the month of April, according to a report released by the Commerce Department on Monday.

The Commerce Department said construction spending edged down by less than a tenth of a percent to an annual rate of $1,298.5 billion in April after inching up by 0.1 percent to a revised rate of $1,299.2 billion in March.

The slight drop came as a surprise to economists, who had expected spending to climb by 0.4 percent compared to the 0.9 percent slump originally reported for the previous month.

The nearly unchanged rate of construction spending came as a jump in spending on public construction was offset by a steep drop in spending on private construction.

While spending on public construction surged up by 4.8 percent to an annual rate of $344.6 billion, spending on private construction tumbled by 1.7 percent to a rate of $954.0 billion, the steepest in six years.

Spending on residential construction slid by 0.6 percent and spending on non-residential construction plunged by 2.9 percent.

The data suggests that Americans cut back on home renovations in April. And spending on new home construction was flat. Higher mortgage rates have weighed on home sales this year, though in recent weeks rates have dropped below 4%, potentially reviving sales. Commercial construction fell sharply in April, driven by a steep decline in construction of factories.

Residential construction spending has fallen for four straight months.

Those declines were offset by a 4.8% surge in government construction spending to a record high of $299.4 billion, led by big gains in state and local government spending, which also rose to a record high.

Spending on highways and streets jumped 6.8%, while school construction rose 2.1%. Federal spending rose to $24.5 billion, the highest since July 2013.

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