US construction spending up slightly 0.1 per cent in August

WASHINGTON – Spending on U.S. construction projects edged up a slight 0.1 per cent in August as a strong gain in government spending offset weakness in home building and nonresidential construction.

The Commerce Department said Monday that the rise, which followed a 0.2 per cent July increase, put total construction at a seasonally adjusted annual rate of $1.32 trillion. That was down a slight 0.4 per cent from a record high set in May.

Residential construction fell 0.7 per cent in August while nonresidential construction edged down 0.2 per cent. Those declines were offset by a strong 2 per cent rise in public construction, which increased to the highest level since July 2009. Spending for federal and state and local projects increased.

Construction activity is contributing to solid overall growth although home building has faced a number of challenges this year.

Builders have had to deal with rising costs for land, lumber and labour. Part of the rise in lumber prices is attributed to the higher tariffs the Trump administration has imposed on Canadian softwood lumber.

For August, construction of single-family homes dropped 0.7 per cent while spending on multi-family projects fell 1.7 per cent.

In the non-residential categories, spending on commercial projects, a category that covers shopping centres, fell 0.9 per cent for while spending on office buildings was up 0.8 per cent.

The advance in spending for government projects included a 5.9 per cent increase for federal projects and a 5.9 per cent surge in state and local construction, a gain which pushed this category to the highest level since March 2009.

The overall economy, as measured by the gross domestic product, grew at a robust 4.2 per cent annual rate in the April-June quarter and economists are forecasting that growth will come in at a still solid 3 per cent rate in the second half of this year.

The National Association for Business Economics released a new forecast Monday projecting that GDP growth for the whole year would hit 2.9 per cent. That would be a significant acceleration from last year’s 2.2 per cent growth rate.