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Construction spending rises

 

Washington – Spending on construction ventures around the country increased   in July to the highest level seen since the beginning of the year, a promising   sign for the economy’s anticipated second-half rebound.

 

The Commerce Department reported Wednesday that the value of building projects   under way clocked in at a seasonally adjusted annual rate of $879.8 billion   in July, representing a modest 0.2 percent increase from June’s level.

 

Although July’s increase wasn’t as big as the 0.5 percent rise that economists   were predicting, June’s performance turned out even better than the government   previously estimated. Revised figures show that construction spending went up   by a brisk 0.7 percent in June from May, compared with the 0.3 percent advance   first estimated.

 

The $879.8 billion pace of construction spending in July marked the highest   level since January, when such spending stood at $883.2 billion on an annualized   basis.

 

Recent economic reports have flashed signals that the economy is healing and   on track to stage a material rebound in the second half of this year. Consumers   are spending, manufacturing appears on the mend and businesses are slowly boosting   investment, although they are cautious about hiring.

 

Some economists believe economic growth in the final six months of this year   will be in the range of around 3.5 percent to just over 4 percent. Others think   it will be closer to a 5 percent pace. In either scenario, such a pace would   be far better than the 2.3 percent growth rate seen in the first six months.

 

Fed meets soon

 

 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Spending   by private builders on all types of projects rose by a solid 0.5 percent   in July to a seasonally adjusted annual rate of $664.2 billion, the highest   level since March.  

 

 

 

Against this backdrop, economists believe the Federal Reserve will probably   hold a key short-term interest rate at a 45-year low of 1 percent when it meets   next on Sept 16. At the Fed’s previous meeting in August, policy-makers not   only held this rate steady but also hinted that it could stay there for some   time.

 

Economists hope that low short-term interest rates and President Bush’s third   tax cut will motivate consumers and businesses to spend and invest more, thus   lifting economic growth.

 

The construction spending report showed that spending by private builders on   all types of projects rose by a solid 0.5 percent in July to a seasonally adjusted   annual rate of $664.2 billion, the highest level since March.

 

Private builders saw gains in residential projects as well as communications   and power facilities. Those gains were tempered by weakness elsewhere, including   declines in spending on hotels and motels, and office buildings.

 

Spending by the government on big public works projects, meanwhile, dropped   by 0.4 percent in July to a rate of $215.7 billion. The government cut spending   on schools, highways and streets. That outweighed increased spending on other   projects including public safety facilities and hospitals and other health-care   buildings.

 

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