U.S. construction spending falls unexpectedly in July

Wednesday 02 - 11:28

By: Azzat Manal

U.S. construction spending falls unexpectedly in July

Construction spending in the United States declined unexpectedly in July, according to data released by the U.S. Department of Commerce, signaling weaker activity across parts of the sector despite expectations for a modest increase.

Total construction spending fell 0.5% during the month to an annualized rate of approximately $2.158 trillion. Economists had anticipated a 0.1% rise. The decline followed a revised reading showing that spending was broadly unchanged in June at around $2.168 trillion.

Residential construction was the main source of the downturn. Spending in the sector dropped 1.3% to an annualized $859 billion, reflecting weaker investment in housing projects. The housing market remains sensitive to borrowing costs, construction expenses and broader economic conditions, all of which can influence developers' decisions.

Private construction spending also decreased by 0.5%, reaching an annualized $1.614 trillion. Within the private sector, however, nonresidential construction recorded a 0.4% increase to $755.2 billion, suggesting that investment in commercial and other non-housing projects remained relatively resilient.

Government construction spending edged down 0.2% to an annualized $543.4 billion. Spending on educational facilities and highway projects both declined by 0.2%, reaching annualized levels of $112.3 billion and $150.3 billion, respectively.

The latest figures point to mixed conditions in the U.S. construction industry. While nonresidential investment continues to provide some support, weakness in residential construction contributed significantly to the overall decline. The data will be closely watched by economists and investors as they assess the strength of the U.S. economy and the outlook for construction activity in the months ahead.