Construction Spending Rose Unexpectedly in June

Washington, DC, Aug. 3, 2009--U.S. construction spending unexpectedly rose in June, as residential real estate and government projects led the way.

The 0.3 percent increase to $965.7 billion followed a revised 0.8 percent drop the prior month, according to data from the Commerce Department in Washington. Private residential projects rose for the second time in three months and spending by the Federal government increased by the most this year.

Spending on infrastructure projects is likely to keep rising in coming months as state and local governments use funds from the $787 billion fiscal stimulus package. In addition, lower home prices and mortgage rates are beginning to boost sales, spurring residential construction and bringing an end to the worst housing slump in seven decades.

Total construction spending was forecast to drop 0.5 percent after an originally reported 0.9 percent decrease the prior month, according to the median estimate of 50 economists. 

Private residential construction spending increased 0.5 percent after falling 3.1 percent the prior month.

Total non-residential construction, including public projects, rose 0.1 percent, led by a 0.9 percent gain in government spending.

Total public construction rose 1 percent as federal expenditures rose 1.9 percent and state and local government outlays increased 1 percent to a record $295.8 billion.

Spending by government agencies accounted for 33 percent of the total in June, up from 29 percent at the same time last year.

The increase in public outlays was widespread, with gains in the construction of schools, office buildings, parks, transportation systems and water facilities.