Construction Spending Rose Unexpectedly in June

Washington, DC, Aug. 2, 2010–Construction spending in the U.S. unexpectedly rose in June, thanks largely to government programs, according to the Commerce Department.

The 0.1% increase in spending followed a revised 1% drop in May that was larger than previously estimated. Spending by federal agencies rose to a record.

Homebuilding and sales are falling after the expiration of a government tax credit that boosted builder sentiment and brought starts to the highest level in more than a year in April. Future demand will depend on the state of the labor market and foreclosures.

Economists forecast construction spending would decline 0.5%.

Construction spending decreased 7.9% in the 12 months ended in June.

Private construction spending dropped 0.6% following a 1.4% decrease in May. Homebuilding outlays fell 0.8%. Private non-residential projects decreased 0.5%, reflecting declines in construction of factories, commercial dwellings and communications stations.

Spending on public construction increased 1.5% from the prior month, led by power, sewage and waste disposal and conservation plants. Federal building climbed 4.6% to $31.7 billion, the most on record.

Spending on single-family residential structures dropped 0.7% in June, the first decline in a year.