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US construction spending tumbled in April

Dave Jones Inc.’s Tyler Burger brazes a copper connection while working at the Sutter Creek apartment complex in Brookfield on April 29. (Staff photo by Kevin Harnack)

Dave Jones Inc.’s Tyler Burger brazes a copper connection while working at the Sutter Creek apartment complex in Brookfield on April 29. Spending on construction projects across the U.S. fell in April by the biggest amount in five years. (Staff photo by Kevin Harnack)

By Martin Crutsinger
AP Economics Writer

WASHINGTON — U.S. construction spending fell in April by the biggest amount in five years, dragged down by declines in housing, commercial construction and spending on government projects.

Construction spending dropped 1.8 percent in April after showing a 1.5 percent gain in March, the Commerce Department reported Wednesday. The change marked the biggest monthly decline seen since January 2011, when spending plunged by 4.1 percent.

This April saw spending on housing fall by 1.5 percent, while spending on nonresidential building was also down by 1.5 percent and that on government projects by 2.8 percent.

The drop in overall construction was unexpected. Private economists had been forecasting a gain of around 0.6 percent. Housing construction has been a bright spot for the economy in recent months. In the first quarter, residential investment grew at a sizzling annual rate of 17.2 percent.

The April report showed widespread declines. The fall in housing reflected a 3.1 percent drop in apartment construction, a volatile category, and no change for single-family construction.

The decline in nonresidential construction stemmed from a drop of 2.1 percent in the construction of hotels and motels and a 3.6 percent fall in the category that includes shopping centers. Office-building construction rose by 1.6 percent during the month, but spending on factories fell by 1.5 percent.

Spending on state and local government projects fell 3 percent, and spending by the federal government dropping by 0.2 percent.

The declines left total construction at a seasonally adjusted annual rate of $1.13 trillion in April, up 4.5 percent from a year ago.

The home construction boom peaked in 2006. But after the housing bubble burst, construction activity fell for the next five years but has been rising since 2012.

Meanwhile, the industry’s unemployment rate was apparently unaffected by the decline in spending. The Associated Builders and Contractors, a national group that mostly represents nonunion companies, reported that the industry’s unemployment rates declined in 44 states between April 2015 and April this year.

The national construction unemployment rate for this April was 6 percent, according to the ABC’s analysis of federal Bureau of Labor Statistics data. That was down from 8.7 percent in March, according to the ABC’s non-seasonally adjusted numbers, and from 7.5 percent in April 2015.

Wisconsin’s construction unemployment rate for April this year was 8.2 percent. That was likewise down from the state’s March number (12.7 percent), as well as its April 2015 number (9.4 percent).

“Historically, April has been the month in which construction ramps up coming out of winter as the weather improves across the nation,” Bernard Markstein, president and chief economist of Markstein Advisors, said in a statement.

Markstein conducted the analysis of Bureau of Labor Statistics data for the ABC.

“Since the start of the national NSA construction unemployment rate series in January 2000, every year the rate has declined in April from March,” he said in the statement. “This year’s fall of 2.7 percent was no exception.”

The ABC’s data dovetailed with employment numbers released almost two weeks ago by the Associated General Contractors of America. The AGC reported on May 20 that Wisconsin had 118,100 people working in construction in April. That was up from 109,300 in the same month last year.

This year’s April figure also showed an increase from the two previous months, according to the AGC. The state’s number for February was 113,600 and its number for March was 114,600.

The Daily Reporter staff writer Dan Shaw also contributed to this report.

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