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US construction spending extends decline in June

U.S. Construction Spending dropped even further in June, mainly due to a sharp drop in expenditures on single-family homes projects as a result of rising mortgage rates and a growing inventory.

Census Bureau of the Commerce Department reported on Friday that construction expenditures fell by 0.4% following a 0.4% decline in May. The economists polled had predicted that construction spending would remain unchanged following a 0.3% decline in May. In June, spending fell 2.9% year-over-year.

The amount spent on private construction projects fell by 0.5%. Residential construction investment fell by 0.7%. Outlays for new single-family housing projects dropped 1.8%.

The latest government data released this week shows that residential investment has contracted at the fastest rate since the fourth quarter 2022.

The Federal Reserve has paused its rate-cutting cycle due to the uncertainty created by tariffs on imported products. The new housing inventory has reached levels not seen since late 2007.

In June, the expenditures on multi-family housing units remained unchanged. Investments in non-residential private structures such as offices and factories decreased by 0.3%.

The second consecutive quarter saw a decline in spending on non-residential buildings.

The spending on public construction projects increased by 0.1%. State and local government spending on construction increased by 0.5% while federal government expenditures dropped by 4.4%. Reporting by Lucia Mutikani, Editing by Chizu nomiyama

(source: Reuters)