WASHINGTON – U.S. construction spending edged up a tiny 0.1% in July, breaking a string of losses due to disruptions caused by the coronavirus pandemic.
The Commerce Department reported that the slight July gain followed a 0.5 per cent decline in June. In July, spending on residential construction rose a solid 2.1 per cent while nonresidential construction fell by 1 per cent.
The 0.1 per cent July gain was weaker than the one per cent increase that many economists had been forecasting. Still, home sales have been strong after an initial hit from the pandemic, and the hope is that those gains will help lift housing construction in the months ahead.
“The trend should improve, especially for residential spending, reflecting strong demand for homes as seen in new and existing home sales,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
The report showed that total government construction fell by 1.3 per cent in July. The expectation is that government building will be depressed in coming months as state and local governments face severe budget restraints because of the loss of tax revenue from the pandemic.
The 2.1 per cent rise in residential construction included a 3.1 per cent increase in spending on single-family construction and a 4.9% rise in apartment construction.
The one per cent drop in non-residential construction included a 3.2 per cent fall in the category that covers shopping centres and a two per cent drop in spending on constructions of hotels and motels. Both of these sectors have been hit hard by the pandemic.
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