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April construction spending falls 2.9% as virus upends work

Workers build a protective barrier as construction resumed on the New York Islanders' new arena, in Elmont, New York on May 27. U.S. construction spending fell 2.9% in April. The Commerce Department said that the April decline followed a basically flat reading in March (AP Photo/Kathy Willens, File)

Workers build a protective barrier as construction resumed on the New York Islanders’ new arena, in Elmont, New York on May 27. U.S. construction spending fell 2.9% in April. The Commerce Department said that the April decline followed a basically flat reading in March (AP Photo/Kathy Willens, File)

By MARTIN CRUTSINGER
AP Economics Writer

WASHINGTON (AP) — U.S. construction spending fell 2.9% in April, showing the largest drop in 18 months, with broad declines across all building activity as shutdowns hobbled projects and workers were told to stay home.

The Commerce Department said the decline in April was the biggest monthly drop since the 3% fall seen in October 2018. It followed on a basically flat reading in March.

Spending on residential construction dropped 4.5% in April, as single-family construction was down 6.6% and the smaller apartment segment down 9.1%

Construction of nonresidential projects fell 1.3% as spending on office buildings, hotels and the sector that includes shopping centers was all down.

Spending on construction by the federal government and state and local governments was down 2.5% in April

There is hope that with government stay-at-home orders being lifted, construction activity may rebound. However, many economists are worried that the recovery from the sharp recession, which has seen millions of workers lose their jobs, may take a good deal of time.

Nancy Vanden Houten, an economist with Oxford Economics, said that she expected a steep drop in construction spending in the second quarter followed by a slow recovery that will be held back by budgetary pressures.

“Public construction, dominated by state and local governments, will likely be depressed as budgets are devastated by the pandemic,” she said.

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