Construction Spending Leaps 1.4% in Month

Construction spending, propelled by a big surge in government activity, soared 1.4% in September, the largest one-month gain since April, the Commerce Department reported Monday.

Building activity rose to an annual rate of $385.7 billion following a 1% August increase, the department said.

Private analysts, however, said the September increase was likely to be among the last big gains for the construction industry, which they predicted would suffer next year from an expected slump in apartment, office and hotel construction.

“The September increase was a good one, but it was due to public spending and residential construction. I think we will start seeing major declines rather than increases because of weakness in the non-residential area,” said Michael Sumichrast, economist for the National Assn. of Home Builders.

The strength in September was led by a 4.9% jump in government construction projects. Government spending on construction projects totaled $76.5 billion at an annual rate, 17.2% higher than a year ago.

But the largest category, highway construction, edged down a slight 0.9%, although it was still 10.8% higher than a year ago.

Analysts said the government category tends to be erratic, and they said they were not looking for such a sizable overall gain in coming months.