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US construction spending posts largest drop in more than five years
[WASHINGTON] US construction spending recorded its biggest decline in more than five years in April as outlays fell broadly, which could prompt economists to lower their second-quarter growth estimates.
Construction spending tumbled 1.8 per cent after an upwardly revised 1.5 per cent jump in March, the Commerce Department said on Wednesday. April's drop was the largest since January 2011.
Economists polled by Reuters had forecast construction spending rising 0.6 per cent in April after a previously reported 0.3 per cent increase in March. Construction outlays were up 4.5 per cent from a year ago.
The weak construction report bucked fairly strong April data on consumer spending, industrial production, goods exports and housing, which have bolstered views the economy was regaining speed after growth braked to a 0.8 per cent annualized rate in the first quarter.
As a result of the soft report, second-quarter gross domestic product estimates, currently ranging as high as a 2.9 per cent rate, could be cut. However, the sharp upward revision to March's construction spending suggests the first-quarter GDP growth estimated could be revised higher.
In April, construction spending was held down by a 1.5 per cent drop in private construction, which was the largest decline since January 2013. Outlays on private residential construction also fell 1.5 per cent as spending on multifamily buildings tumbled 3.1 per cent.
Spending on private nonresidential structures plunged 1.5 per cent in April. Weak spending on nonresidential structures such as gas and oil well drilling contributed to slow economic growth at the start of the year.
Public construction spending dropped 2.8 per cent in April as outlays on state and local government construction projects, the largest portion of the public sector segment, tumbled 3.0 per cent. Federal government construction spending slipped 0.2 per cent.