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Construction spending falls 1.8 percent in June

Construction spending falls 1.8 percent in June
Construction workers build a commercial complex in Springfield, Ill.
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WASHINGTON (AP) - U.S. construction spending fell in June by the largest amount in more than three years as housing, non-residential construction and government spending all weakened.

Construction spending dropped 1.8 percent in June on a seasonally adjusted basis after rising by a revised 0.8 percent in May, the Commerce Department reported Friday. It was the biggest setback since a 2.8 percent fall in January 2011.

The weakness was widespread with spending on housing down for a second straight month, falling 0.3 percent, while non-residential building activity fell 1.6 percent, the biggest decrease since January. Spending on government projects dropped 4 percent, the biggest decline in more than a decade.

The June performance represented a setback to hopes stronger construction activity will help support overall economic growth.

The decline in housing reflected a 1.4 percent fall in spending on single-family construction which offset a 2.5 percent rise in the smaller apartment sector. Even with the two months of declines, housing construction is still 7.4 percent above the level of a year ago.

The drop in non-residential activity reflected weakness in hotel construction and the category that includes shopping malls. Non-residential building is 11.2 percent higher than a year ago.

The 4 percent fall in government projects was the biggest one-month setback since government building tumbled by 6 percent in March 2002. The June weakness reflected a 5.2 percent decline in state and local government projects which offset a 10.4 percent rise in spending on federal building projects.

Government building activity has been constrained in recent years by the fall in tax revenue as a result of the Great Recession and efforts at the federal level to get soaring budget deficits under control.

A slump in construction in the winter contributed to the economy shrinking at an annual rate of 2.1 percent in the January-March quarter, the biggest decline since the first quarter of 2009 during the depths of the Great Recession.

Economists say a rebound to a 4 percent growth rate in the second quarter will be followed by solid growth of around 3 percent in the overall economy in the second half of this year.
U.S. economy grew at 2.1 percent rate in third quarter U.S. economy grew at 2.1 percent rate in third quarter