US construction spending likely showed further gain in May

Economic Indicators Associated Press

The Commerce Department reports on U.S. construction spending in May at 10 a.m. Eastern Wednesday.

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CONSTRUCTION UP: Economists believe spending rose 0.6 percent, according to a survey of economists by data firm FactSet.

BUILDING GAINS: In April, U.S. construction spending climbed 2.2 percent to the highest level in more than six years. That increase was fueled by healthy gains in housing, government spending and non-residential construction.

Economists expect building activity will provide support for the economy this year after a prolonged period of sluggishness in the wake of the recession.

The economy went into reverse during the January-March quarter, shrinking at an annual rate of 0.2 percent, as consumer spending, construction and other economic activities slowed in an unusually severe winter.

But economists believe growth posted a solid rebound in the April-June quarter, predicting the economy expanded at an annual rate of 2 percent or better. They are forecasting even faster growth of around 3 percent in the second half of the year.

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Both the commercial and residential real estate markets appear stronger this year. Almost 60 percent of the real estate executives participating in a recent survey by the law firm Akerman LLP said they were more optimistic about the market than in 2014.

Developers say they are better-funded and finding more opportunities in the residential, commercial and retail sectors. The job growth over the past year has been substantial enough for some builders to launch office projects without pre-existing rental commitments.

"It's fueled by the feeling that the job growth is there and tenants have need for more space because of new employees," said Richard Bezold, who is chairman of Akerman's real estate practice.