Construction Spending Continues Decline

Construction spending in the U.S. fell month-over-month by 0.6% in June to a seasonally adjusted rate of $1.13 trillion, with sharp declines in spending on public commercial projects and on manufacturing outlays.

Monthly spending for public commercial construction dropped 14.5% in June to $3 billion, though year-over-year, spending in this category was up 4.6%, according to the latest figures released by the Commerce Department today. Total construction spending for manufacturing dropped 4.5% in June to $71.2 billion, but the drop in this case was part of an overall decline in the sector, year-over-year, of 10.4%.

The dismal construction numbers come on the back of a 1.2% real GDP letdown reported Friday. “Construction activity has stalled a bit more than thought, largely due to slowing residential investment growth and low levels of public sector investment,” said Anirban Basu, chief economist with the Associated Builders and Contractors, Inc. (ABC). “With apartment rents no longer rising in a number of markets, the nation’s apartment building boom has taken a bit of a pause.”

In private construction, the food and beverage sector continued to feel the heat of reduced demand in June as spending declined 10.4% to $5.96 billion, while construction spending in the sector dropped 18.6% since June 2015, Commerce said.

Construction spending for the automotive service/parts sector was up 7.3% to $2.37 billion in June, a much-needed boost to the year-over-year spending for the category, which was down 25.8%, Commerce said. The health care sector also lopped off 2% on construction spending in June to $31.5 billion and remains down since June 2015 by 5.9%.

Public construction spending overall fell 0.6% in June to $282.5 billion and is down 6% from June 2015, Commerce said. Spending on sewage and waste disposal dropped 2.7% in June to $21.3 billion, a fall that illustrates the sector’s troubles this past year as it saw a 15% drop in spending from June 2015.

Total federal construction spending slipped 2.3% in June to $22.7 billion, but remains in positive territory (up 1.7%) from June 2015. State and local government construction spending also fell in June, by 0.5% to $259.8 billion and remains down by 6.6% from June 2015.

- Nicholas Stern, editorial associate

No comments:

Post a Comment