Construction Spending Holds Steady in August

Construction spending was unchanged in August after posting its first gain in four months in July, the government said today. Government spending offset declines in residential and non-residential construction.

The Commerce Department said residential, non-residential and government spending totaled a seasonally adjusted annual rate of $442.5 billion, after a revised 0.3% increase in July.

July’s advance originally was reported to have been 0.4% and was the first since a 0.4% gain in March. Spending fell 2.8% in April, 0.2% in May and 0.6% in June.

Analysts have attributed the general weakness in the construction industry to high interest rates, tight lending requirements, consumer caution over the state of the economy and the Persian Gulf crisis and, in some areas, overbuilding that has resulted in lofty vacancy rates.

The weakness has been illustrated in recent Labor Department reports showing the loss of nearly 100,000 construction jobs in the past three months. This included 40,000 jobs, after a seasonal adjustment, in August, the sixth consecutive monthly decline.

Construction spending in August was 2% above the $433.9 billion in the same month of 1989.

Residential spending in August fell 1.2%, to $186.9 billion, after a 0.2% decline in July.

Single-family spending was down 1.3%, to $108.5 billion, after a 1.2% loss a month earlier. Apartment construction was up 1.1%, to $19 billion, after a 0.5% gain in July.

Non-residential spending fell 4.3%, to $104.8 billion, erasing a 4.2% advance the previous month. Industrial spending, which jumped 16.2% in July, slipped back 12.7% in August.

Government spending rose 6.1%, to $115.1 billion, after a 2.7% decline the previous month. Spending on highways and streets led the advance with a 9% gain.