Construction spending throttles higher in April on home-building boost

The story is corrected to fix the numbers on public and private construction.

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The numbers: Construction expenditures were 1.8% higher in April compared to March, the Commerce Department said Friday.

What happened: Spending jumped more than expected in the month: economists surveyed by Econoday had forecast an 0.8% increase for the month. The April spending pace of $1.31 trillion, seasonally adjusted, was 7.6% higher than a year ago. While the monthly spending rates are often revised, expenditures for the first four months of the year are 6.6% higher than the same period in 2017. And in the April report, revisions to prior months were all upward.

Private-sector expenditures rose 2.8% compared to March, while public sector spending fell. Residential construction spending was up 4.4% during the month, and stood 9.7% higher than a year ago.

Market reaction: The Dow Jones Industrial Average   continued to power higher after the release of the data, following solid jobs numbers and the release of the ISM manufacturing index.

What they’re saying: “The April jump reversed the March drop, but the bigger picture here is that this is the fifth 1%-plus increase in the past six months,” said Ian Shepherdson, Chief Economist for Pantheon Macroeconomics. “The strength is across the board, public and private, residential and commercial, with the only softer spot being the state and local government sector, where huge volatility is normal.”