Construction spending rose 1.8 percent in August, its first advance in three months, the government said Monday in a report indicating the building industry may be pulling out of its slump.
The Commerce Department said spending increased $7.3 billion to a seasonally adjusted annual rate of $421.8 billion last month. That followed decreases of 0.6 percent in July and 0.8 percent in June. Spending rose 1.4 percent in May.It was thought earlier the industry decline had bottomed out when the Commerce Department reported that July construction spending posted a tiny fractional increase of 0.02 percent. However, additional information caused a downward revision in that report.
Analysts have been looking for a pickup in construction spending ever since interest rates began falling earlier in the year. Fixed-year mortgage rates declined from a peak of 11.22 percent in March to 10.22 at the end of August, according to a survey by the Federal Home Loan Mortgage Co.
In Monday's report, the department said residential construction dropped a miniscule 0.05 percent to an annual rate of $198.9 billion, with single-family construction off 0.2 percent to an annual rate of $113.1 billion.
Apartment buildings gained 0.4 percent to $23.5 billion on an annual rate.
Non-residential construction showed a 2.9 percent increase to an annual rate of $100.3 billion. A 4.5 percent increase in office buildings and a 1.8 percent gain in factory buildings led the advance.
Government construction rose 5.3 percent to an annual rate of $86 billion as the largest government category, highway building, rebounded 4.2 percent after falling 4.5 percent in July.
The total construction figure was up 3.4 percent from the level of building a year ago.