The boom times may be over for the construction industry, sapping the labor market of one of its key sources of strength over the past year.
Construction spending fell in June, tumbling 0.3 percent to an annual pace of $2.5 trillion, data from the Commerce Department showed Thursday.
Economists had expected an increase of 0.2 percent. None of the economists surveyed by Econoday had forecast a decline.
As well, the Commerce Department revised down the May figure, which now shows a 0.4 percent decline instead of the original 0.1 percent drop.
Private sector residential construction spending declined by 0.3 percent, led by a 1.2 percent decline in single-family home construction. Compared with a year ago, however, spending is up 7.3 percent. Multifamily construction inched up 0.1 percent but is down 7.3 percent compared with June of last year.
Manufacturing construction spending, which has become the largest nonresidential sector thanks to generous subsidies from the U.S. government, rose by 0.1 percent, the smallest increase of the year. Compared with 12 months earlier, however, it is up 19 percent. Compared with prepandemic spending, spending on building factories is up nearly 200 percent.
Spending on construction of power facilities and streets and highways, formerly the largest segments for construction spending, fell by 0.6 percent and 0.4 percent respectively. Spending on commercial buildings dropped by one percent.
Government spending fell by 0.4 percent, led by the decline in road construction and a decline in educational construction spending.
The construction sector has added 235,000 jobs over the past 12 months through June, accounting for about nine percent of the total gains in employment over the period.