U.S. construction spending falls again in July, lower residential investment expected in Q3

U.S. construction spending dropped again in July, falling for the second straight month. Total construction spending in the nation dropped 0.6 percent sequentially, as compared with the consensus expectations of a modest rebound of 0.6 percent.

Public construction spending continued to drive the weakness, which dropped 1.4 percent, while the drop in private construction spending was more modest. While public construction spending was expected to decline in July, the fall was larger than was expected, which partly explains the miss relative to the forecast, noted Barclays in a research report.

Moreover, private construction spending after the last month’s weakness, a modest rebound was expected. Delving into details of private construction spending, non-residential spending was the major drag that fell 1.9 percent, while residential construction spending rebounded in line with the projection, stated Barclays. On the public spending front, declines were mainly widespread throughout the residential and non-residential categories.

“Today’s weaker-than-expected data suggest lower residential investment in Q3 than we had factored in prior to the report. We are now tracking -2.4 percent q/q saar for residential investment, which takes our Q3 GDP tracker down one-tenth to 2.4 percent q/q saar”, added Barclays.

At 16:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at -1.19224. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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