Construction Spending Drops In July

While construction spending maintained its consistent year-over-year growth in July, it dropped 0.9 percent from the previous month.

The U.S. Census Bureau of the Department of Commerce pointed out in its recent study that construction spending during July 2012 was estimated at a seasonally adjusted annual rate of $834.4 billion, down from $842.2 billion.

Industry experts say the drop is largely due to delay in spending on home improvement projects.

Also, budget constraints have hindered activity in the public sector domain, with the overall spending on public construction edging down 0.4 percent in July, data released by the Commerce Department showed. While the spending on highway and street construction dropped 0.3 percent in July, educational construction spending decreased 0.6 percent.

A statement released by the Associated General Contractors of America officials said that long-delayed measures for essential water, wastewater and other infrastructure projects should be enacted to boost public construction growth.

Meanwhile, it was a positive report for new homes and apartments sectors. With a 1.5 percent increase from June, the single-family segment rose for the fourth straight month. New multifamily construction also escalated 2.8 percent in July.

Private residential and non residential spending dropped 1.6 percent and 0.9 percent respectively for the month of July.

“The July spending numbers send a very mixed message,” Ken Simonson, chief economist, Associated General Contractors of America, said in a statement. “Construction of new homes, apartments and most private nonresidential structures appears to be driving gains in construction activity even as the public sector continues to drag on broader sector growth.”

Meanwhile, construction activity in July recorded a 10 percent decline, according to a report by McGraw-Hill Construction. Tough fiscal situation faced by the federal, face and local governments has affected public works and institutional building sector, the report said.

"The construction industry remains stuck for now in an extended process of turning the corner," Robert A. Murray, vice-president of economic affairs for McGraw-Hill Construction said in a statement.