WASHINGTON — U.S. construction spending rebounded 0.5 per cent in August after two months of contraction, helped by strength in homebuilding, and commercial and government construction.
The climb came after declines of 1.2 per cent in July and 0.8 per cent in June, the Commerce Department reported Oct. 2. It was the best showing since a 1.6 per cent rise in May. Still, the August gain was not enough to recoup the losses of the past two months, leaving spending 1.5 per cent below the May level.
Housing construction was up 0.4 per cent. Nonresidential activity increased 0.5 per cent, reflecting strength in hotel and office building. The August rebound was also helped by a gain in spending by state and local governments, which helped offset a further decline at the federal level.
Economists believe that construction spending will get a boost in the coming months as rebuilding efforts get underway from the recent devastating hurricanes.
Government analysts said that Hurricane Harvey only affected construction activity in Texas for the last week of August, while Hurricane Irma did not have any impact until September.
The overall economy grew at a 3.1 per cent annual rate in the April-June quarter, the best showing in more than two years. Analysts believe activity slowed a bit in the July-September quarter to around 2.5 per cent GDP growth. But they expect the impact of reconstruction efforts to start boosting GDP as soon as the current quarter.
The 0.4 per cent advance in homebuilding reflected a 0.3 per cent increase in single-family construction spending and a 0.9 per cent jump in the smaller and more volatile apartment sector.
Overall public construction was up 0.7 per cent in August, reflecting a 1.1 per cent rise in state and local activity which offset a 4.7 per cent plunge in spending at the federal level, the third straight drop in federal government construction activity.