Construction spending and employment increased in reports out this week as optimism for a strong second quarter has quickly picked up steam.
Construction Spending Jumps
US construction spending surged in April to the highest level in nearly 6-and-a-half years as outlays increased broadly, pointing to some pockets of strength in the economy.
Construction spending jumped 2.2% to an annual rate of $1 trillion, the highest level since November 2008, the Commerce Department said on Monday. The percentage increase was the largest since May 2012.
March’s outlays were revised to show a 0.5% increase instead of the previously reported 0.6% fall. Economists polled by Reuters had forecast construction spending rising 0.7% in April.
The report adds to business spending plans, employment and housing data in suggesting some momentum in the economy early in the second quarter even as consumer spending and industrial production have been soft. The economy contracted at a 0.7% annual rate in the first quarter.
Construction Employment Up, Too
Construction employment expanded in 232 metro areas, declined in 66 and was stagnant in 60 between April 2014 and April 2015, according to a new analysis of federal employment data released today by the Associated General Contractors of America.
Association officials said even as contractors in many parts of the country continue to expand their payroll, many firms remain concerned about the potential impacts of federal transportation funding shortfalls.
“Demand, particularly from private sector clients, has rebounded enough that many firms have been steadily expanding their headcount during the past twelve months,” said Ken Simonson, the association’s chief economist. “But construction employment is still below prior peak levels in most areas, as firms worry about the fate of federal transportation funding.”