US construction spending rises strongly in June
2023.08.01 11:04
© Reuters. FILE PHOTO: A home under construction stands behind a “sold” sign in a new development in York County, South Carolina, U.S., February 29, 2020. REUTERS/Lucas Jackson/File Photo
WASHINGTON (Reuters) – U.S. construction spending increased solidly in June and the prior month’s data was revised higher, boosted by outlays in both single and multifamily housing projects.
The Commerce Department said on Tuesday that construction spending rose 0.5%. Data for May was revised higher to show construction spending surging 1.1% instead of 0.9% as previously reported. Economists polled by Reuters had forecast construction spending increasing 0.6%.
Construction spending advanced 3.5% on a year-on-year basis in June. Spending on private construction projects increased 0.5%, with investment in residential construction rising 0.9% after rebounding 2.9% in the prior month.
Private construction spending had surged 1.3% in May. Spending on single-family housing projects surged 2.1% in June.
Though the housing market has taken the biggest hit from the Federal Reserve’s fastest monetary policy tightening cycle since the 1980s, an acute shortage of single-family homes available for sale is driving construction.
That helped to limit the pace of contraction in residential investment in the second quarter.
The construction spending report showed outlays on multifamily housing projects increased 1.5% in June. There is, however, limited scope for multifamily construction to continue rising. Apartment vacancy rates are rising and the stock of multifamily housing under construction is at a record high.
Spending on private non-residential structures like factories was unchanged in June as a rise in manufacturing, commercial and lodging was offset by declines in outlays on healthcare and power plants.
Efforts by President Joe Biden’s administration to bring semiconductor manufacturing back to the United States are boosting factory construction, underpinning business investment and the overall economy.
Spending on public construction projects gained 0.3% after advancing 0.7% in May. State and local government spending rose 0.3% while outlays on federal government projects jumped 0.8%.
