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US construction spending drops 1.3% in June

A construction worker carries bars on July 29 while helping build a scaffolding on the side of a hotel in the Mount Vernon section of Baltimore. The U.S. Commerce Department reported Thursday that construction spending fell by 1.3% in June. (AP Photo/Julio Cortez, File)

A construction worker carries bars on July 29 while helping build a scaffolding on the side of a hotel in the Mount Vernon section of Baltimore. The U.S. Commerce Department reported Thursday that construction spending fell by 1.3% in June. (AP Photo/Julio Cortez, File)

By MARTIN CRUTSINGER
AP Economics Writer

WASHINGTON (AP) — Spending on U.S. construction projects fell in June by the largest amount in seven months, a result of weakness in home building, nonresidential construction and the largest drop in spending on government projects in 17 years.

The Commerce Department said Thursday that spending fell 1.3% in June. It followed a 0.5% decline in May and was the biggest drop seen since a similar 1.3% decline occurred last November.

The weakness in June was widespread. Spending on housing construction decreased by 0.5 percent, a result of continued troubles in homebuilding. Nonresidential construction fell for a third straight month, down 0.3 percent, and there were declines in such sectors as hospitals, schools and transportation.

Government spending was down 3.7%, the biggest decline seen since a 6% drop in March 2002. Spending by state and local governments, the largest category, fell 4.1% while federal outlays rose 2.6%.

The general economy, as measured by gross domestic product, slowed to growth at an annual rate of 2.1% in the April-June quarter, down from a 3.1% rate in the first three months of the year.

Analysts believe second-half growth will remain around the 2% level and they are hoping that home construction may rebound with mortgage rates falling further in response to the Federal Reserve’s decision on Wednesday to reduce its key policy rate for the first time in a decade.

Spending on residential construction fell at a 1.5% rate in the second quarter, showing its sixth straight quarterly decline.

In a separate report Thursday, the government said the number of jobless workers filing for unemployment benefits rose by 8,000 to a seasonally adjusted figure of 215,000 last week. It was the highest level in four weeks but even with the gain application, which serve as a proxy for layoffs, remained near historic lows.

The government will release the July jobs report on Friday and many economists think it will show the jobless rate returning to near a half-century low of 3.6 percent, after rising slightly to 3.7% in June.

Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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