U.S. construction spending posts biggest drop in more than a year

U.S. construction spending recorded its biggest drop in more than a year in June as investment in both private and public projects fell, but spending for the prior months was revised sharply higher.

The Commerce Department said on Wednesday that construction spending fell 1.1 percent, the largest decline since April 2017. Data for May was revised up to show construction outlays rising 1.3 percent instead of the previously reported 0.4 percent gain.

April's outlays were also revised up to show them increasing 1.7 percent instead of 0.9 percent.

Economists polled by Reuters had forecast that construction spending would advance 0.3 percent in June. Construction spending accelerated 6.1 percent on a year-on-year basis.

Spending on private residential projects fell 0.5 percent in June following a 1.3 percent increase in May. Homebuilding has been slowing, with builders citing rising material costs as well as persistent land and labor shortages. Residential investment contracted in the first half of the year.

Spending on private nonresidential structures slipped 0.3 percent in June after gaining 0.2 percent in the prior month. Overall, outlays on private construction projects fell 0.4 percent in June after increasing 0.9 percent in May.

Investment in public construction projects tumbled 3.5 percent, the biggest drop since March 2013, after surging 3.0 percent in May. Spending on federal government construction projects declined 3.1 percent. That followed a 0.9 percent increase in May.

State and local government construction outlays plunged 3.5 percent in June, also the largest drop since March 2013, after jumping 3.1 percent in the prior month.