US construction spending extends decline in June
Construction spending dropped 0.3 per cent after a downwardly revised 0.4 per cent decline in May
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US CONSTRUCTION spending unexpectedly fell in June and the prior month’s data was revised lower as higher mortgage rates weighed on single-family homebuilding.
The Commerce Department’s Census Bureau said on Thursday (Aug 1) that construction spending dropped 0.3 per cent after a downwardly revised 0.4 per cent decline in May.
Economists polled by Reuters had forecast construction spending rising 0.2 per cent after a previously reported 0.1 per cent dip in May. Construction spending advanced 6.2 per cent year-on-year in June.
Spending on private construction projects fell 0.3 per cent in June after dropping 0.4 per cent in the prior month. Investment in residential construction dropped 0.3 per cent after falling 0.7 per cent in May.
Outlays on new single-family construction projects decreased 1.2 per cent. Spending on multi-family housing gained 0.1 per cent. Mortgage rates surged in the spring, depressing homebuilding and sales.
Mortgage rates have since fallen and could decline further after the Federal Reserve on Wednesday kept its benchmark overnight interest rate in the 5.25 per cent-5.50 per cent range, where it has been since last July, but opened the door to reducing borrowing costs as soon as its next meeting in September.
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Rising housing inventory, with new single-family housing supply in June hitting the highest level since early 2008, could limit any rebound in new construction.
Residential investment, which includes homebuilding and house sales, contracted in the second quarter after double-digit growth in the January-March quarter.
In June, spending on private non-residential structures like factories dipped 0.1 per cent.
Investment in public construction projects fell 0.4 per cent after slipping 0.2 per cent in May.
State and local government spending was unchanged and outlays on federal government projects declined 5.4 per cent. REUTERS
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