U.S. construction spending posts largest drop in more than five years

WASHINGTON, June 1 (Reuters) - U.S. construction spending recorded its biggest decline in more than five years in April as outlays fell broadly, which could prompt economists to lower their second-quarter growth estimates.

Construction spending tumbled 1.8 percent after an upwardly revised 1.5 percent jump in March, the Commerce Department said on Wednesday. April’s drop was the largest since January 2011.

Economists polled by Reuters had forecast construction spending rising 0.6 percent in April after a previously reported 0.3 percent increase in March. Construction outlays were up 4.5 percent from a year ago.

The weak construction report bucked fairly strong April data on consumer spending, industrial production, goods exports and housing, which have bolstered views the economy was regaining speed after growth braked to a 0.8 percent annualized rate in the first quarter.

As a result of the soft report, second-quarter gross domestic product estimates, currently ranging as high as a 2.9 percent rate, could be cut. However, the sharp upward revision to March’s construction spending suggests the first-quarter GDP growth estimated could be revised higher.

In April, construction spending was held down by a 1.5 percent drop in private construction, which was the largest decline since January 2013. Outlays on private residential construction also fell 1.5 percent as spending on multifamily buildings tumbled 3.1 percent.

Spending on private nonresidential structures plunged 1.5 percent in April. Weak spending on nonresidential structures such as gas and oil well drilling contributed to slow economic growth at the start of the year.

Public construction spending dropped 2.8 percent in April as outlays on state and local government construction projects, the largest portion of the public sector segment, tumbled 3.0 percent. Federal government construction spending slipped 0.2 percent. (Reporting By Lucia Mutikani; Editing by Andrea Ricci)