Construction Spending Falls Unexpectedly in April

U.S. construction spending unexpectedly dipped 0.1 percent in April, its first decline in 10 months, due to a sharp drop in outlays on residential building, a government report showed on Thursday.

Construction spending declined to a seasonally adjusted annual rate of $1.196 trillion in April from March's record pace of $1.197 trillion, which was revised slightly downward, the Commerce Department reported.

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Wall Street economists polled by Reuters forecast April construction spending to be unchanged from the originally reported March rate of $1.199 trillion. The decline in total spending was the first month-on-month drop since June 2005.

Private construction fell 0.1 percent to an annual pace of $933.3 billion as private residential construction fell 1.1 percent to a $657.1 billion rate after hitting a record high in March. April marked the biggest fall for residential outlays since a 1.4 percent drop in January 2004.

Economists have been expecting a slowdown in the overheated U.S. housing market for some time and have anticipated that business spending would help to offset this drag on the economy.

Total private non-residential construction, seen as a proxy for business spending, jumped 2.5 percent to an annual rate of $276.2 billion.

Public sector construction spending fell 0.2 percent to $262.6 billion as spending declined in several categories including education, commercial and amusement and recreation.

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