August gain in construction a surprise

Construction spending in the U.S. unexpectedly rebounded in August, propelled by the biggest jump in state and local government outlays in more than two years.
The 1.4 percent gain reversed the revised 1.4 percent drop in July, Commerce Department figures showed last week in Washington. The median estimate of 52 economists surveyed by Bloomberg News called for a 0.2 percent decline. The industry was up 1.4 percent from August 2010 before adjusting for seasonal variations, the first positive reading this year.
Increased building of multifamily residences, like apartments and townhouses, adds to evidence that Americans are moving away from home buying in favor of renting. Even with the gain in state and local spending in August, public construction was down 5.3 percent from a year earlier, showing the pain caused by budget cuts.
Estimates in the Bloomberg survey ranged from an increase of 1.2 percent to a drop of 1.1 percent. The prior month’s reading was previously reported as a 1.3 percent decline.
Private construction spending rose 0.4 percent. Homebuilding outlays increased 0.7 percent, while private nonresidential projects climbed 0.2 percent.
Spending by public entities jumped 3.1 percent from the prior month, the most since February 2009. Federal construction spending fell 0.5 percent, a third consecutive drop, while state and local agencies spent 3.5 percent more. &#8226