U.S. construction spending declined for a third straight month in June with spending on nonresidential construction falling by the biggest amount in six months. In June, construction spending dropped 0.6% after declines of 0.1% in May and 2.9% in April, reported by the Commerce Department on Monday. Nonresidential construction dropped 1.3 percent, the biggest drawback since December, while residential activity remained the same in June. Spending on government projects declined 0.6 percent, the fourth consecutive decline, with both federal and state and local construction activity down.
April through June construction weakened following posting firm gains in the winter. A number of analysts think warmer-than-normal winter weather caused builders to move up the start of projects, resulting in the second quarter to look feeble. Analysts anticipate construction will rally in the next 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. In June, housing constructions remained the same with an gain in home renovation spending offsetting falls of 0.4% in single family construction and a fall of 1.5% in apartment building.
Nonresidential construction dropped 1.3% was led by a 4.5% drop in spending on construction in factory construction and a 1.6% decline in the area that includes shopping centers. The 0.6% decline in spending on government projects showed a 2.3% drop in spending at the federal level and a 0.5% fall in spending on construction projects by local and state governments. Overall construction spending fell to a seasonally adjusted annual rate of $1.13 trillion in June, a light 0.3 percent above the level in June 2015.