THE ECONOMY : Spending on Construction Barely Rises

High interest rates continued their assault on private construction in April, but the government said Thursday that total construction spending rose a weak 0.1% due to an upturn in work on public projects.

The Commerce Department reported a total increase in new spending to $414.9 billion on a seasonally adjusted annual rate after declines of three consecutive months. That was 4.7% above a year earlier.

The last time construction spending fell for three straight months was just before the start of the 1981-82 recession when it dropped from February through June, 1981.

Private construction fell 1.2% in April as the building pace dropped 0.2% for residential buildings and 4.8% for non-residential structures.

On the other hand, public construction was up 5.7%, due in large part to an 8.9% increase in highway and street improvements.

New Housing Down

“Neither of these movements was surprising,” said David Bersen, chief economist for the Federal National Mortgage Assn.

“We should see some continued weakness in private construction in both residential and non-residential building because of the effects of higher mortgage rates and higher interest rates in general in the first quarter of the year,” he said.

The high interest rates have been brought about by Federal Reserve efforts to tighten credit in an effort to slow the economy and thus stem inflation.

The number of new housing units being built was off 1.3% to an annual rate of $141.8 billion after a 1.2% fall in March.