WASHINGTON, July 1 U.S. construction spending
rose less than expected in May, which could prompt a further
downgrading of second-quarter economic growth estimates.
Construction spending edged up 0.1 percent to an annual rate
of $956.1 billion, the Commerce Department said on Tuesday.
However, April's construction spending was revised up to show a
0.8 percent rise, taking some of the sting out of the report.
Economists polled by Reuters had expected construction
spending to advance 0.5 percent after a previously reported 0.2
The data was the latest to suggest the economy's rebound
from a brutally cold winter could fall short of expectations.
Growth contracted at a 2.9 percent annual pace in the first
quarter, also weighed down by a slow pace of inventory
accumulation by businesses.
Economists last week slashed their second-quarter growth
estimates after weak consumer spending in May. Growth forecasts
are now running as high as a 3.5 percent pace and as low as a
2.1 percent rate.
Construction spending in May was held back by a 0.3 percent
decline in private construction projects, which offset a 1.0
percent rise in public construction outlays. Private
construction is the largest portion of construction spending.
Private residential construction tumbled 1.5 percent,
reflecting weak housing starts.
A run-up in mortgage rates has stymied the housing market
recovery. Investment in home building and nonresidential
structures such as factories and gas pipelines contracted in the
first three months of this year for a second straight quarter.
Spending by the federal government dropped 8.9 percent, the
largest fall since December 2010. State and local government
projects increased a solid 2.0 percent.
(Reporting by Lucia Mutikani; Editing by Paul Simao)