Construction spending in the U.S. increased a little in April on the improved building activity in the private non-residential sector, according to a report by the Associated General Contractors of America.
The report reveals that construction spending inched up 0.4 percent in April from the values of March and increased 4.3 percent on a year over year basis. The slight month on month increase was attributed to the considerable hike in private non-residential construction spending that went up 2.2 percent from a month ago in April and 0.6 percent from a year ago.
Apparently, the largest private non-residential sector that witnessed the highest spending was the power generation construction segment, which went up 10.9 percent in April after falling deep in March.
However, experts said that the growth in the sector was "volatile" and "inconsistent."
"New apartment and home construction were standouts again and should remain very strong for the rest of 2013," Ken Simonson, chief economist at AGC said in a statement. "Growth has been more inconsistent among private nonresidential categories, reflecting reluctance of businesses to commit to investing in structures amid ongoing economic uncertainty."
Meanwhile, private residential construction spending was down 0.1 percent in April when compared to March but had jumped 19 percent on a year on year basis. Public construction spending recorded a major dip with a 1.2 percent drop from April and a 5.1 percent plunge from the values of 2012.
Dwindling investment and growth in public sector construction is holding back the economic development of the country, reports CNBC News.
According to the feature at CNBC:
"The data supports the view that government austerity is holding back economic growth this year. Public sector spending at construction sites fell 1.2 percent in April, hit by a sharp decline in state and local outlays, which hit a seven-year low."
The manufacturing sector also took a beating in May, making it the first decline in the past six months. According to an industry manufacturing index accounted by the Institute of Supply management (ISM), it was revealed that factory production activity dropped to 49 points from the 50.7 recorded in April. The index contrasted starkly with its forecasts.
As supply contracts, demand is bound to get higher and the prices are expected to keep soaring in the coming months. Recently, home prices in the U.S. reached a seven year high. However, economists believe that the market has a long way to go before the boom arrives.
But will the industry be able to recover in full form with tightening credit availability and construction material prices ranging as high as now?
