US construction spending drops 0.6 per cent in June

WASHINGTON – U.S. construction spending fell for a third straight month in June with spending on nonresidential construction dropping by the largest amount in six months.

Construction spending fell 0.6 per cent in June following declines of 0.1 per cent in May and 2.9 per cent in April, the Commerce Department reported Monday.

Nonresidential construction declined 1.3 per cent, the biggest setback since December, while residential activity was unchanged in June. Spending on government projects fell 0.6 per cent, the fourth straight decline, with both federal and state and local construction activity down.

Construction weakened in the April-June period after posting solid gains in the winter. Some analysts believe warmer-than-normal winter weather caused builders to move up the start of some projects, causing the second quarter to look weaker. Analysts expect construction will rebound in coming months.

The weakness in construction in the spring was reflected in a disappointing report on overall growth in the second quarter, as measured by the gross domestic product. The GDP expanded at a modest annual rate of 1.2 per cent in the April-June quarter with residential construction falling at an annual rate of 6.1 per cent after six quarters of strong gains.

For June, housing construction showed was unchanged with an increase in home renovation spending offsetting declines of 0.4 per cent in single family construction and a drop of 1.5 per cent in apartment building.

The 1.3 per cent decline in nonresidential construction was led by a 4.5 per cent plunge in spending on construction in factory construction and a 1.6 per cent fall in the category that includes shopping centres.

The 0.6 per cent drop in spending on government projects reflected a 2.3 per cent fall in spending at the federal level and a 0.5 per cent decline in spending on construction projects by state and local governments.

Total construction spending declined to a seasonally adjusted annual rate of $1.13 trillion in June, a slight 0.3 per cent above the level in June 2015.