U.S. construction spending drops 0.6 percent in June

By Martin Crutsinger
AP Economics Writer

WASHINGTON (AP) — 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 percent in June following declines of 0.1 percent in May and 2.9 percent in April, the Commerce Department reported Monday.

Nonresidential construction declined 1.3 percent, the biggest setback since December, while residential activity was unchanged in June. Spending on government projects fell 0.6 percent, 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 percent in the April-June quarter with residential construction falling at an annual rate of 6.1 percent 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 percent in single family construction and a drop of 1.5 percent in apartment building.

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

The 0.6 percent drop in spending on government projects reflected a 2.3 percent fall in spending at the federal level and a 0.5 percent 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 percent above the level in June 2015.