Ahead of the Bell: US construction spending

US construction spending expected to rebound in July after big June decline

Associated Press
US construction spending up 1.8 percent in July
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In this photo taken July 22, 2014, a construction worker is seen on a 36 floor high rise condominium in Miami. The Commerce Department reports on U.S. construction spending in July on Tuesday, Sept. 2, 2014. (AP Photo/Alan Diaz)

WASHINGTON (AP) -- The Commerce Department reports on U.S. construction spending in July. The report will be issued Tuesday at 10 a.m. Eastern.

CONSTRUCTION UP: The expectation is that construction activity rose 0.7 percent in July, according to a survey of economists by data firm FactSet.

BUILDING REBOUND: A rise in July activity would represent a rebound after construction had fallen 1.8 percent in July on a seasonally adjusted basis. It was the biggest one-month decline in more than three years, since a 2.8 percent fall in January 2011.

In June, housing, non-residential construction and government spending all declined. The 4 percent fall in government projects was the biggest setback in this category since government building had tumbled by 6 percent in March 2002.

A slump in construction in the winter contributed to the economy, as measured by the gross domestic product, shrinking at an annual rate of 2.1 percent in the January-March quarter. That was the biggest plunge in GDP since the first quarter of 2009 during the depths of the Great Recession.

But the economy rebounded sharply in the April-June quarter, growing at an annual rate of 4.2 percent. Economists think economic growth will continue at a solid pace in the second half of this year although an initial forecast of 3 percent growth in the July-September quarter may be trimmed following a report Friday that consumer spending fell in July. Economists remain optimistic that Americans will resume shopping in coming months, helped by rising employment and stronger consumer confidence.

In the spring, construction also contributed to growth with residential construction growing at a 7.2 percent rate after two quarterly declines and spending by businesses on construction projects rising at an annual rate of 9.4 percent.

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