Ahead of the Bell: Construction Spending

A government report due Tuesday is forecast to show that construction activity fell 0.5 percent in May, as pain in the housing sector continued to outweigh gains in other parts of the economy.

The Commerce Department report, scheduled for release at 10 a.m. EDT, is expected to show that spending fell to an annual rate of $1.115 trillion, according to the consensus forecast of Wall Street economists surveyed by Thomson/IFR.

The Commerce Department reported last month that construction activity fell by 0.4 percent to $1.121 trillion in April after having been down 0.6 percent in March.

Construction has not increased since last September as the building industry continues to be battered by the worst housing slump in decades. Builders such as D.R. Horton Inc., Lennar Corp. and Centex Corp. are still cutting back sharply.

Private residential housing construction dropped by 2.3 percent in April, the 26th consecutive monthly decline. But private nonresidential activity rose by 1.6 percent, pushing that activity to an all-time high as spending on shopping centers, office buildings and hotels all showed big gains.