US construction spending rises strongly in June
US CONSTRUCTION spending increased solidly in June and the prior month’s data was revised higher, boosted by outlays in both single and multifamily housing projects.
The Commerce Department said on Tuesday (Aug 1) that construction spending rose 0.5 per cent. Data for May was revised higher to show construction spending surging 1.1 per cent instead of 0.9 per cent as previously reported. Economists polled by Reuters had forecast construction spending increasing 0.6 per cent.
Construction spending advanced 3.5 per cent on a year-on-year basis in June. Spending on private construction projects increased 0.5 per cent, with investment in residential construction rising 0.9 per cent after rebounding 2.9 per cent in the prior month.
Private construction spending had surged 1.3 per cent in May. Spending on single-family housing projects surged 2.1 per cent in June.
Though the housing market has taken the biggest hit from the Federal Reserve’s fastest monetary policy tightening cycle since the 1980s, an acute shortage of single-family homes available for sale is driving construction.
That helped to limit the pace of contraction in residential investment in the second quarter.
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The construction spending report showed outlays on multifamily housing projects increased 1.5 per cent in June. There is, however, limited scope for multifamily construction to continue rising. Apartment vacancy rates are rising and the stock of multifamily housing under construction is at a record high.
Spending on private non-residential structures like factories was unchanged in June as a rise in manufacturing, commercial and lodging was offset by declines in outlays on healthcare and power plants.
Efforts by President Joe Biden’s administration to bring semiconductor manufacturing back to the US are boosting factory construction, underpinning business investment and the overall economy.
Spending on public construction projects gained 0.3 per cent after advancing 0.7 per cent in May. State and local government spending rose 0.3 per cent while outlays on federal government projects jumped 0.8 per cent. REUTERS
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