Builders began work on more office buildings, hotels and factories in March, lifting construction spending after three straight monthly declines. Construction spending rose 1.4% in March, the Commerce Department says. It was the biggest advance since April 2010 and was helped by a rise in spending on home-improvement projects. The overall increase, however, came after building activity had fallen in February to the lowest level in more than a decade. Even with the advance, activity in March stood at a seasonally adjusted annual rate of $768.9 billion, just half the $1.5 trillion pace considered healthy by economists. It could take four years for the construction industry to fully recover from the housing bust and deep recession, economists say.
John Ryding, an economist at RDQ Economics, says the gains in March represent a bounce back from a slow winter hampered by harsh weather in many parts of the country. Construction was among the industries that dragged on economic growth in the January-March quarter. Construction spending should add to economic growth in the April-June quarter.
Private construction projects increased 2.2% to a seasonally adjusted annual rate of $476.1 billion. The gain reflected a 2.6% rise in residential construction and a 1.6% increase in nonresidential projects. The gain in residential activity came from spending on home-remodeling projects. Spending on both single-family homes and apartments declined.