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Construction Spending Falls to 1-Year Low in June

Image: Construction Spending Falls to 1-Year Low in June

By    |   Monday, 01 Aug 2016 10:34 AM

U.S. construction spending fell for a third straight month in June as outlays dropped across the board, suggesting a downward revision to the second-quarter economic growth estimate published last week, Reuters reported.

Construction spending declined 0.6 percent to its lowest level since June 2015 after an upwardly revised 0.1 percent dip in May, the Commerce Department said on Monday.

Construction outlays were up 0.3 percent from a year ago.

Economists polled by Reuters had forecast construction spending rising 0.5 percent in June after a previously reported 0.8 percent drop in May. Their June estimates were largely based on the government's assumptions for private residential and nonresidential construction spending in the advance GDP report.

The government reported on Friday that gross domestic product increased at a 1.2 percent annual rate in the second quarter after rising at a 0.8 percent pace in the January-March period. Weak spending on home building and nonresidential structures, including gas and oil well drilling, contributed to anemic growth in the last quarter.

In June, construction spending was held down by a 0.6 percent drop in private construction. Outlays on private residential construction were unchanged as spending on both single-family and multi-family projects fell. Private residential construction spending edged up 0.1 percent in May. Spending on renovations increased in June.

Spending on private nonresidential structures fell 1.3 percent in June, the biggest decline since December 2015, after rising 0.4 percent in May.

Public construction spending slipped 0.6 percent in June, dropping for a fourth straight month. Outlays on state and local government construction projects, the largest portion of the public sector segment, fell 0.5 percent. That was the fourth consecutive monthly decline. Federal government construction spending dropped 2.3 percent in June.

Meanwhile, American factories expanded for a fifth straight month in July, another sign that U.S. manufacturers are recovering from damage caused by a strong dollar, a private survey says.

The Institute for Supply Management says its manufacturing index last month read 52.6, the AP reported. That's down from 53.2 in June, but anything higher than 50 signals growth.

Production grew faster. New orders grew at a slightly slower pace. Employment contracted in July after having risen modestly in June. It also fell in May and April.

U.S. factories have recovered after being pounded by economic weakness overseas and a strong dollar, which made their goods costlier in foreign markets. The ISM index stayed below 50 from October through February before turning positive in March.

The ISM is a trade group of purchasing managers.

(Newsmax wire services contributed to this report).

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Economy
U.S. construction spending fell for a third straight month in June as outlays dropped across the board, suggesting a downward revision to the second-quarter economic growth estimate published last week, Reuters reported.Construction spending declined 0.6 percent to its...
economy, factories, manufacturing, construction spending
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2016-34-01
Monday, 01 Aug 2016 10:34 AM
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