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US construction spending posts smallest gain in 5 months; housing expands

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WASHINGTON — U.S. construction spending increased in June by the smallest amount in five months as a big drop in nonresidential building activity offset a third straight increase in home building.

Construction spending edged up a slight 0.1 percent in June following a 1.8 percent increase in May and a 3.8 percent rise in April, the Commerce Department said Monday. Even with the June slowdown, construction spending advanced to a seasonally adjusted annual rate of $1.06 trillion, the best pace in seven years.

Residential construction expanded 0.4 percent in June. But nonresidential building slipped 1.3 percent, with the category that covers shopping centers sliding 4.4 percent. Spending on government building projects was up 1.6 percent as a solid increase at the state and local levels offset a drop in federal projects.

PHOTO: In this Wednesday, July 15, 2015 photo, Chris Esch, left, and Tony Ede, both of Conlon Construction Co., install a new window as Bryant Elementary School undergoes renovations, in Dubuque, Iowa. The Commerce Department reports on U.S. construction spending in June on Monday, Aug. 3, 2015. (Mike Burley/Telegraph Herald via AP) MANDATORY CREDIT
In this Wednesday, July 15, 2015 photo, Chris Esch, left, and Tony Ede, both of Conlon Construction Co., install a new window as Bryant Elementary School undergoes renovations, in Dubuque, Iowa. The Commerce Department reports on U.S. construction spending in June on Monday, Aug. 3, 2015. (Mike Burley/Telegraph Herald via AP) MANDATORY CREDIT

Construction is expected to provide support for the overall economy this year, led by gains in housing activity.

The government reported last week that the total economy, after nearly stalling out during a harsh winter, posted a moderate rebound in the April-June quarter. The gross domestic product expanded at an annual rate of 2.3 percent, up from growth of just 0.6 percent in the first quarter.

Residential construction grew at a solid annual rate of 6.6 percent in the spring.

Economists believe activity will strengthen further in the second half, helping to push growth to around 3 percent in the third and fourth quarters of this year.

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