[WASHINGTON] US construction spending barely rose in June as private outlays posted their biggest drop in a year, but the underlying trend suggested the economy remained on solid ground.
Construction spending increased 0.1 per cent, the smallest rise since January, the Commerce Department said on Monday.
May's outlays were revised sharply higher to show a 1.8 per cent gain instead of the previously reported 0.8 per cent rise. Economists polled by Reuters had forecast construction spending rising 0.6 per cent in June. Construction spending was up 12 per cent compared to June of last year.
In June, construction spending was restrained by a 0.5 per cent drop in private construction spending, the largest decrease since June 2014. Spending on private non-residential construction projects fell 1.3 per cent, the biggest drop since January 2013. Spending on nonresidential structures has been undermined by investment cutbacks in the energy sector in response to the tumble in crude oil prices.
Outlays on private residential construction, however, rose 0.4 per cent to their highest level since May 2008, reflecting gains in home building and a bump up in renovations.
Public construction outlays jumped advanced 1.6 per cent to their highest level since November 2010.
Spending on state and local government projects - the largest portion of the public sector segment - surged 2.2 per cent to the highest level since September 2010. Federal government outlays dropped 4.7 per cent, the biggest fall since January.