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US construction spending posts biggest drop in seven months amid slump in private projects
US construction spending fell by the most in seven months in June as investment in private construction projects tumbled to a more than 18-month low.
The Commerce Department said on Thursday that construction spending dropped 1.3 per cent, the biggest decline since last November.
Data for May was revised up to show construction outlays falling 0.5 per cent, instead of decreasing 0.8 per cent as previously reported.
Economists polled by Reuters had forecast construction spending rising 0.3 per cent in June. Construction spending fell 2.1 per cent on a year-on-year basis in June.
Spending on private construction projects dropped 0.4 per cent in June to US$962.9 billion, the lowest level since October 2017. That followed a 0.3 per cent decline in the prior month.
Investment in private residential projects fell 0.5 per cent in June after being unchanged in May.
Homebuilding has remained weak even as mortgage rates have dropped sharply from last year's high levels. Spending on residential construction has contracted for six straight quarters, the longest such stretch since the Great Recession.
Spending on private non-residential structures, which includes manufacturing and power plants, fell 0.3 per cent in June after decreasing 0.6 per cent in the previous month. Private non-residential investment has now declined for three straight months.
Investment in non-residential construction fell at its steepest pace in more than three years in the second quarter, helping to hold back economic growth to a 2.1 per cent annualised rate.
The US economy grew at a 3.1 per cent pace in the first quarter.
In June, investment in public construction projects tumbled 3.7 per cent, the largest drop since March 2002, after decreasing 1.2 per cent in May.
Spending on state and local government construction projects fell 4.1 per cent, also the biggest decline since March 2002. That followed a 0.9 per cent decrease in May.
Outlays on federal government construction projects rebounded 2.6 per cent in June after plunging 5.6 per cent in the prior month. REUTERS