the republic logo

Construction spending falls 1.8 percent in June, biggest decline in more than 3 years

bug
Share/Save/Bookmark

WASHINGTON — U.S. construction spending fell in June by the largest amount in more than three years as housing, non-residential construction and government spending all weakened.

Construction spending dropped 1.8 percent in June on a seasonally adjusted basis after rising by a revised 0.8 percent in May, the Commerce Department reported Friday. It was the biggest setback since a 2.8 percent fall in January 2011.

The weakness was widespread with spending on housing down for a second straight month, falling 0.3 percent, while non-residential building activity fell 1.6 percent, the biggest decrease since January. Spending on government projects dropped 4 percent, the biggest decline in more than a decade.

The June performance represented a setback to hopes stronger construction activity will help support overall economic growth.

The decline in housing reflected a 1.4 percent fall in spending on single-family construction which offset a 2.5 percent rise in the smaller apartment sector. Even with the two months of declines, housing construction is still 7.4 percent above the level of a year ago.

The drop in non-residential activity reflected weakness in hotel construction and the category that includes shopping malls. Non-residential building is 11.2 percent higher than a year ago.

The 4 percent fall in government projects was the biggest one-month setback since government building tumbled by 6 percent in March 2002. The June weakness reflected a 5.2 percent decline in state and local government projects which offset a 10.4 percent rise in spending on federal building projects.

Government building activity has been constrained in recent years by the fall in tax revenue as a result of the Great Recession and efforts at the federal level to get soaring budget deficits under control.

A slump in construction in the winter contributed to the economy shrinking at an annual rate of 2.1 percent in the January-March quarter, the biggest decline since the first quarter of 2009 during the depths of the Great Recession.

Economists say a rebound to a 4 percent growth rate in the second quarter will be followed by solid growth of around 3 percent in the overall economy in the second half of this year.

Think your friends should see this? Share it with them!

All comments are moderated before posting. Your email address must be verified with Disqus in order for your comment to appear.
View our commenting guidelines and FAQ's here.

Story copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Feedback, Corrections and Other Requests: AP welcomes feedback and comments from readers. Send an email to info@ap.org and it will be forwarded to the appropriate editor or reporter.


PHOTO: In this July 3, 2014 photo, a construction worker builds housing for students near Drexel University in Philadelphia.  The Commerce Department reports on U.S. construction spending in June on Friday, Aug. 1, 2014. (AP Photo/Matt Rourke)

In this July 3, 2014 photo, a construction worker builds housing for students near Drexel University in Philadelphia. The Commerce Department reports on U.S. construction spending in June on Friday, Aug. 1, 2014. (AP Photo/Matt Rourke)

 

All content copyright ©2014 The Republic, a division of Home News Enterprises unless otherwise noted.
All rights reserved. Privacy policy.