Dive Brief:
- Construction spending declined 0.6% in June to a seasonally adjusted annual rate of $1.134 trillion, down from the upwardly revised rate of $1.141 trillion in May, the Commerce Department reported Monday.
- Private residential construction spending once again held steady, while private nonresidential spending fell another 1.3% in June. Within residential, single-family spending slipped 0.4%, while multifamily decreased 1.5%. Public construction spending decreased 0.6% in June.
- Despite the decline, June construction spending was still 0.3% higher than June 2015, and spending in the first half of 2016 was 6.2% higher than the same period last year.
Dive Insight:
June's slide marks the third consecutive month of declines in construction spending. The results failed to meet expectations, as economists surveyed by Reuters had forecast a 0.5% rise in June.
Although construction spending has seen steady declines since April, experts have said that many construction firms had accelerated their start dates for major projects during the winter, when weather was warmer than usual. They said they anticipate the industry will bounce back in the next few months, according to U.S. News & World Report.
The disappointing June spending results coincide with Dodge Data & Analytics' report last month that the value of June construction starts slipped 7% to a seasonally adjusted annual rate of $595.1 billion. Dodge attributed that decline mainly to drops in the residential and public works sectors.
Although residential construction spending fell in both the single-family and multifamily sectors — but were offset by gains in renovation spending — the housing market had a mostly positive June. Builder confidence slipped just one point to a score of 59, housing starts increased 4.8% in June, existing home sales rose 1.1%, new home sales surged 3.5% to an eight-year high, and pending home sales inched up 0.2%.
