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Construction spending barely bugged in June and private outlays posted their biggest drop in a year! However, housing economist continue to point to the underlying trend and suggest that the economy remained on solid ground.

 

Construction spending increased 0.1 percent and was the smallest rise since January as reported by the Commerce Department.

The bright news came from May’s revised outlays that were up sharply higher to show a 1.8 percent gain instead of the previously reported 0.8 percent rise. Housing economists polled before the report forecasted construction spending would rise 0.6 percent in June. Overall, construction spending is up 12 percent compared to June of last year.

In June, construction spending was restrained by a 0.5 percent drop in private construction spending; the largest decrease since June 2014. Spending on private non-residential construction projects fell 1.3 percent, the biggest drop since January 2013. Spending on nonresidential structures has been undermined by investment cutbacks in the energy sector in response to the tumble in crude oil prices.

Outlays on private residential construction, however, rose 0.4 percent to their highest level since May 2008, reflecting gains in home building and a bump up in renovations as more home owners are looking to do sorely needed home improvements.

Public construction outlays advanced by 1.6 percent to their highest level since November 2010. Spending on state and local government projects – the largest portion of the public sector segment – surged 2.2 percent to the highest level since September 2010. Federal government outlays dropped Livingston-Homes-for-Sale

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4.7 percent, the biggest fall since January.