Construction Spending Sinks in June

Construction spending unexpectedly fell -.3% MoM (consensus +.2% MoM) last month, for the first time since January, as non- residential spending rose less (+.1% MoM) than residential fell (-.7% MoM). Non-residential growth has been the support for construction spending this year, as the housing market has continued to weaken. Over the past year, non-residential construction has risen +14.1% YoY, while residential construction spending has fallen -16.1% YoY. Combined, construction has fallen -2.4% YoY.

The softness in construction investment in June appears to be due to government spending coming to a halt last month. Public investment was unchanged in June, with non-residential public development falling -.1% MoM, after growing 10.3% YoY. Non-residential public construction includes things like water-treatment plants and government office buildings. Public construction of hospitals has been quite strong this past quarter, but is slowing.

Private residential construction continues its 16 month slump, falling an additional -.7% MoM in June, for a cumulative loss of -16.1% YoY.

Slower construction spending will be a drag on GDP.