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US construction spending rises to 8-1/2-year high
[WASHINGTON] US construction spending rose to an 8-1/2-year high in March and the prior month's outlays were revised higher, pointing to sustained strength in the sector despite a sharp downturn in spending by energy firms.
Construction spending increased 0.3 per cent to the highest level since October 2007, following an upwardly revised 1.0 per cent jump in February, the Commerce Department said on Monday.
Economists polled by Reuters had forecast construction spending rising 0.5 per cent in March after a previously reported 0.5 per cent decline in February.
Construction outlays were up 8.0 per cent from a year ago. Though February's outlays were revised higher, construction spending for January was revised down to show a 0.3 per cent drop instead of the previously reported 2.1 per cent increase.
A drop in nonresidential construction investment helped to hold down economic growth to a meager 0.5 per cent annualized rate in the first quarter. Much of the weakness in spending on nonresidential structures reflected relentless aggressive spending cuts in the energy sector, which is reeling from last year's plunge in oil prices.
In March, construction spending was supported by a 1.1 per cent surge in private construction, which hit its highest level since October 2007. Outlays on private residential construction increased 1.6 per cent. Spending on private nonresidential structures, which also includes factories and offices, advanced 0.7 per cent to the highest level since October 2008.
Public construction outlays fell 1.9 per cent in March as outlays on state and local government construction projects, the largest portion of the public sector segment, declined 1.4 per cent. Federal government construction spending tumbled 7.4 per cent in March.