Construction Spending Up but Pace is Still Weak

Posted by jcashman

Courtesy of Associated Press

WASHINGTON — U.S. builders increased spending on homes, office buildings and other projects in August after a big decline in July. The gain still left the construction industry far below levels considered healthy.

Construction spending rose 1.4 percent in August, the Commerce Department said Monday. The increase followed a 1.4 percent drop in July, which had been the biggest setback in six months.

Building activity reached a seasonally adjusted annual rate of $799.1 billion. That’s 4.8 percent above an 11-year low hit in March. But it’s barely more than half the $1.5 trillion pace considered healthy.

Analysts say it could be four years before construction returns to healthy levels. A dismal outlook for housing and a weak economy have forced governments to cut back on building plans.

Housing construction, in particular, has all but stalled. Americans bought fewer homes during this year’s peak buying season than at any time in the past half century. With unemployment stuck above 9 percent, many people are fearful about buying a home out of concern they could lose their jobs or home prices could fall further.

In addition, the weak economy has weakened government construction and made it harder for builders to finance projects.

For August, private construction rose 0.4 percent. Government construction spending rose 3.1 percent. A big increase in spending at the state and local levels offset a drop in federal construction.

Private residential construction rose 0.7 percent after two months of declines. Both single-family and apartment construction showed increases. And nonresidential construction increased 0.2 percent, lifted by construction of office buildings, factories and transportation, communication and power projects.

© Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.



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Posted by jcashman on Oct 3 2011. Filed under Business. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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