Construction Sector's Woes Were Worse Than Expected in July
The consensus of economists surveyed by Bloomberg had been for July construction spending to fall 0.6%. Construction spending fell 2.8% in May. On a year-over-year basis, construction spending totaled a seasonally-adjusted annual rate of $805.2 billion, or down 10.7% from a year ago, in July 2009.
For the month, public construction spending, which includes fiscal stimulus infrastructure projects, fell 1.2% to a seasonally adjusted annual rate of $298.8 billion. In that category, highway construction plummeted 2.9% and education construction dipped 0.1%.
The news was almost as bad concerning private construction, which declined 0.8% in July to a seasonally-adjusted annual rate of $506.4 billion. Private residential construction, which includes single-family homes, plummeted 2.6% to an annual rate of $240.3 billion. But private nonresidential construction, which includes shopping malls and office buildings, rose 0.8% to an annual rate of $266.1 billion.
The Commerce Department's construction spending report provides the most comprehensive survey of both public and private sector building activity.
Difficult Days For Construction Continue
July's construction report is a three-part downer. First, the top-line statistic was a larger decline than expected. Second, public construction activity, whose fiscal stimulus-based projects have heretofore helped support the beleaguered sector, also declined. Finally, the June construction stat was revised down, to an 0.8% decline.
If that scenario ensues, it would put even more pressure on other sputtering economic drivers -- business investment, consumer spending, manufacturing and exports -- to propel the U.S. recovery.