Construction Spending Declines in June
Government sector falls but private construction rises
Construction spending in June slipped 1.3% from the previous month’s level, to an estimated $1.206-trillion annual rate but the total rose 1.6% year over year, the Commerce Dept. has reported.
Commerce’s U.S. Census Bureau said on Aug. 1, in its latest monthly report on construction put in place, that the nonresidential sector fell 2% from May and 3.1% from June 2016, to an annual rate of $697 billion.
The Census Bureau also reported that residential construction edged down 0.3% from May, to $508.8 billion, but climbed 9% from the year-earlier level.
The June figures are preliminary and the annual rates are adjusted for seasonal variations.
Ken Simonson, Associated General Contractors chief economist, said in a statement, “There has been a steep decline in public investment in nearly all types of construction over the past year.” Overall public-sector work was down 5.4% month to month, and 9.5% versus the year-earlier total.
Simonson added, “Private nonresidential construction is still rising overall but generally at slower rates than was occurring a few months ago.”
Only two of the 16 overall nonresidential categories recorded monthly upturns in June: office construction, which was up 1.9% from May, to $73 billion; and communication, which rose 2.8%, to $22.4 billion.
Two major nonresidential categories posted strong year-over-year gains—commercial construction, which jumped 13%, to $85 billion; and office buildings, which climbed 11%.
Those two segments are at “the head of the class” in private construction, said Anirban Basu, Associated Builders and Contractors chief economist.
Basu said office construction is being “driven by a combination of job growth among certain office-space-using categories” and communication is being sparked “largely by enormous demand for data-center capacity.”
Three segments showed double-digit decreases from June 2016—sewage/waste disposal, down 16.8%, to $18.5 billion; water supply, off 20.6%, to $11.3 billion; and conservation/development, which plunged 20.6%, to $6.5 billion.