Construction spending edges up 0.1% in July

By Martin Crutsinger
AP Economics Writer

WASHINGTON (AP) — U.S. construction spending edged up a tiny 0.1% in July, breaking a string of losses due to disruptions caused by the coronavirus pandemic.

The Commerce Department reported that the slight July gain followed a 0.5% decline in June. In July, spending on residential construction rose a solid 2.1% while nonresidential construction fell by 1%.

The 0.1% July gain was weaker than the 1% increase that many economists had been forecasting. Still, home sales have been strong after an initial hit from the pandemic, and the hope is that those gains will help lift housing construction in the months ahead.

“The trend should improve, especially for residential spending, reflecting strong demand for homes as seen in new and existing home sales,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

The report showed that total government construction fell by 1.3% in July. The expectation is that government building will be depressed in coming months as state and local governments face severe budget restraints because of the loss of tax revenue from the pandemic.

The 2.1% rise in residential construction included a 3.1% increase in spending on single-family construction and a 4.9% rise in apartment construction.

The 1% drop in non-residential construction included a 3.2% fall in the category that covers shopping centers and a 2% drop in spending on constructions of hotels and motels. Both of these sectors have been hit hard by the pandemic.