Washington, D.C., June 2--Spending on construction projects around the country slowed in April to the lowest level in four months as builders coped with the lackluster economic recovery.
The Commerce Department reported Monday that the value of construction projects dipped by 0.3 percent in April from March to a seasonally adjusted annual rate of $862.6 billion, marking the third straight month that construction spending went down.
April's performance was weaker than economists expected. They were forecasting a 0.2 percent increase.
The weakness in April was broad based, with builders reporting less spending on everything from single-family homes to a variety of commercial ventures, including office buildings and industrial complexes.
However, government spending on big public works projects rose by 0.2 percent in April from March to an annual rate of $201.2 billion. That increase reflected stronger spending on housing, highways, military bases and other projects.
Residential construction by private builders nudged down by 0.3 percent in April from March to an annual rate of $449.9 billion.
The residential side of the construction market, however, has been holding up well during the economy's slump. But the commercial side has been largely weak, reflecting the wariness of companies to boost capital spending and hiring, major forces restraining economic growth.
Spending on commercial construction projects by private builders dropped by 2.6 percent in April to a rate of $156.1 billion. Cutbacks in spending were reported for industrial complexes, office buildings and other categories.
The Federal Reserve has kept a key short-term interest rate at a 41-year low of 1.25 percent since November. The rationale: Near rock bottom rates will motivate consumers and businesses to spend and invest more and help boost economic growth.
Economists have offered mixed opinions on whether the Fed will lower that key rate at its next meeting June 24-25.
A new, 10-year, $350 billion package of tax rebates, lower tax rates, new breaks for businesses and investors along with aid to states should help the economy get through a spell of lackluster growth, economists said.
The value of all construction activity in April, of a rate of $862.6 billion, represented the lowest level since December, when projects totaled $856.7 billion, on an annualized basis.
