Construction Spending Increase 0.4% in August

WASHINGTON — Spending on construction unexpectedly rebounded from a 10-year low in August, growing 0.4% to $811.8 billion as government projects offset waning private construction activity, according to Commerce Department data released Friday.

Analysts in a Market News International survey had expected construction spending to fall 0.4% in August. Public construction rose 2.5%.

“Almost all of that rise, however, could be attributed to an increase in public works projects, largely supported by stimulus spending, which will soon play out,” Diane Swonk, chief economist at Mesirow Financial, said in a research note. “Private-sector construction activity [declined] across a broad spectrum of sectors in both residential and commercial real estate.”

July construction spending was revised downward to $808.6 billion, a 1.4% drop from June and the lowest level since August 2000.

Federal construction spending rose 0.7%, while state and local government spending rose 2.7%.

Public construction was boosted by a 5.0% increase in spending on highway and street construction.

New home construction fell 4.9% and private residential construction dropped 0.3% to post its fourth straight decline. Single-family construction fell 4.2% and multifamily building plunged 11.4%.

Private nonresidential construction fell 1.4% in August, with declines in every sector except health care and education.

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