Yesterday, the United States Commerce Department reported that June construction spending fell; this is the second time in three months that the Commerce Department reported a decline in construction spending. Construction spending increased 1.6 percent on a year-over-year basis.
From May to June, construction spending fell a total of 1.3%. This follows a 1.8% decline in April of this year.
Overall spending was reported at a seasonally adjusted annual rate of $1.21 trillion (compared with last month’s revised figure of $1.22 trillion). Both private spending and public spending were also down in the month of June. Total private construction spending fell .06% while total public construction spending fell significantly. Spending in the public sector was down 5.44% from May to June. This is the biggest drop in public projects since March 2002.
The decline in spending was unexpected. Analysts had forecast construction spending to increase by 0.4 percent in June.
Construction spending on almost all property types was down in June. The only category that saw an increase in spending, although slight, was in the private nonresidential (office) sector. Spending edged up 0.1 percent in June after a 0.6 percent increase in May. Investment in residential and nonresidential structures such as oil and gas wells is slowing as the boost from oil prices fades.
Year over year data is positive in some sectors. Residential construction spending is up 9 percent from June 2016 and office and commercial spending are up by 11 percent and 13 percent respectively. Total private spending is up by 5.3 percent since last year while total public spending is down by 5.4 percent.