Builders trimmed work for second month

By Martin Crutsinger
AP Economics Writer

WASHINGTON (AP) — U.S. builders trimmed their activity for a second straight month in August as a solid gain in home construction failed to offset declines in nonresidential activity and government projects.

Overall construction spending dipped 0.7 percent in August, compared to July, the Commerce Department reported Monday. In July, spending had fallen 0.4 percent.

The August decline left spending at a seasonally adjusted annual rate of $837.1 billion, which is 12.2 percent above a 12-year low hit in February 2011. Still, construction activity is roughly half of what economists consider to be healthy.

One bright spot in the August report was a 0.9 percent increase in private residential construction, another sign that housing is recovering following a prolonged slump. In August, both single-family and apartment construction was up.

The August gain in private residential construction pushed this sector up to a seasonally adjusted annual rate of $273.5 billion, 17.8 percent above a year ago.

The broader economy is likely to benefit from a stronger housing market. When home prices rise, people typically feel wealthier and spend more. Consumer spending drives nearly 70 percent of economic activity.