Construction spending in the U.S. posted modest gains in April, driven by a rebound in residential construction and government works, making the total activity hitting its highest level in five years.
Construction spending rose 0.2% in April to an annual rate, seasonally adjusted, from 953,500 million, its strongest performance since March 2009, the Commerce Department said Monday.
The April increase was lower than economists expected, but the government revised upwards the activity of March, with a gain of 0.6%, compared with an initial estimate of a 0.2% increase.
The small improvement in April, along with the sharp increase in March, indicate that the construction industry is recovering from the rigors of winter, so it will boost its growth in the coming months.
The April figure marked the third consecutive increase after bad weather sapped spending by 0.4% in January. The construction activity dragged the overall economy in the first quarter, when GDP contracted.
The U.S. economy as a whole contracted at an annual rate of 1% in the January-March quarter. Analysts estimate that growth will recover to a rate of about 3.8% in the April-June period.
The expectation is to increase recruitment and therefore consumer spending will rise. Other sectors, including construction, should also be recovered.