US construction spending falls 0.6pc in July

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WASHINGTON, Sept 3 (AP) Construction spending took a bigger-than-expected tumble in July as housing activity dropped to the lowest level in seven years and nonresidential activity fell for the first time in seven months.brThe Commerce Department reported Tuesday that construction spending declined 0.6 per cent in July, double the 0.3 per cent decrease analysts had been expecting.brHousing activity fell for a 16th consecutive month, declining 2.3 per cent to a seasonally adjusted annual rate of $357.8 billion. That was the lowest level since March 2001, the start of the last recession.brNonresidential activity, which had been offsetting some of the weakness in the residential sector also fell in July, dropping 0.7 per cent to an annual rate of $416.8 billion. It was the first setback in that category since December.brAnalysts are concerned that nonresidential building will weaken in coming months as banks - battered by big losses on mortgage loans - tighten lending standards for nonresidential projects as well.brOverall, construction spending totalled $1.084 trillion at a seasonally adjusted annual rate in July. Last month's 0.6 per cent drop represented the largest setback since a 0.9 per cent decline in February. The government revised the June performance to show a 0.3 per cent increase instead of the 0.4 per cent decline that had been originally reported.brConstruction activity is 4.7 per cent below the level of a year ago, representing one of the major drags on the current economy.brFor July, the 0.7 per cent drop in nonresidential construction followed gains of 1.7 per cent in June and 3.1 per cent in May. Last month's weakness reflected declines in the construction of factories, power plants, schools and health care facilities.brPublic construction projects rose by 1.4 per cent to $309.7 billion in July as spending for federal, state and local building projects rose to all-time highs.brSpending for state and local projects was up 1.2 per cent to an annual rate of $285.68 billion, while construction of federal projects rose by 3.9 per cent to an annual rate of $24.05 billion.brThe 2.3 per cent decline in private housing construction was nearly double the 1.4 per cent decline in June and showed that builders are still aggressively trying to cut back on their production to help deal with the worst slump in housing demand in decades. The glut of unsold homes is being worsened by soaring mortgage foreclosures dumping even more properties on the market.