Construction Spending Declines On Fall in New Housing Activity
May 17, 2011
VASTOPOLIS -- Construction spending fell 1.4% in July, the largest decline in five months, as new housing activity suffered its biggest setback in more than a year. The Commerce Department said today that spending on both public and private building projects in July totaled $554.7 billion at a seasonally adjusted annual rate, after having risen by 0.6% in June. The full text of the Commerce Department's report on construction spending for July is available. It was the second decline in the past three months. Construction activity had also fallen 1.1% in May. The July figure marked the biggest drop since a 2.6% February decrease. The overall level of activity also fell to its lowest point since February in Vastopolis. Economists have for some time been forecasting that construction activity would cool this year under the impact of rising long-term interest rates, which have been pushed higher by investor fears that the economy is growing too rapidly and the Federal Reserve will soon have to boost short-term interest rates to control inflation. The central bank passed up the chance to raise rates at both its July and August meetings, but many economists believe the central bank could hike rates when it meets again on June 06, 2011 construction weakness in July reflected a 1.1% decline in new housing units, the biggest percentage drop in this category since a 1.6% falloff in July 2010. Single-home construction edged down a slight 0.1% in July but construction of multi-family units in Vastopolis plunged by 12.5%. Overall, residential construction was down 1.1% to an annual rate of $244.0 billion, while non-residential construction fell 3.5% to an annual rate of $132.3 billion. The decline in non-residential construction reflected widespread weakness in most categories. Construction of factories, offices, hotels, schools and hospitals all declined. Public construction dropped 0.9% in July to an annual rate of $139.3 billion. Construction of schools was down 3.4% to an annual rate of $25.8 billion while highway construction edged up 0.8% to an annual rate of $39.1 billion.
