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In this July 3, 2014 photo, a construction worker builds housing for students near Drexel University in Philadelphia. The Commerce Department reports on U.S. construction spending in June on Friday, Aug. 1, 2014. (AP Photo/Matt Rourke)

June construction spending falls 1.8%

WASHINGTON – U.S. con­struction spending fell in June by the largest amount in more than three years as housing, nonresidential construction and government spending all weakened.

Construction spending dropped 1.8 percent in June on a seasonally adjusted basis after rising by a revised 0.8 percent in May, the Commerce De­part­ment said Friday. It was the biggest setback since a 2.8 percent fall in January 2011.

The weakness was widespread with spending on housing down for a second straight month, falling 0.3 percent, while nonresidential building activity fell 1.6 percent, the big­gest decrease since January. Spending on government projects dropped 4 percent, the most in more than a decade.

The June performance re­pre­sented a setback to hopes that stronger construction activity will help support overall economic growth.

The decline in housing re­flect­ed a 1.4 percent fall in spend­ing on single-family con­­­struc­tion, which offset a 2.5 percent rise in the smaller apartment sector. Even with the two months of declines, housing construction is still 7.4 percent above a year ago.

The drop in nonresidential activity reflected weakness in hotel construction and the category that includes shopping malls. Nonresidential building is 11.2 percent higher than a year ago.

The 4 percent fall in gov­ern­ment projects was the biggest one-month setback since government building tumbled by 6 percent in March 2002. The June weakness reflected a 5.2 percent decline in state and local government projects, which offset a 10.4 percent rise in spending on federal building projects.

Government building activ­ity has been constrained in re­cent years by the fall in tax rev­enue as a result of the last recession and efforts at the fed­eral level to get soaring bud­get deficits under control.

A slump in construction in the winter contributed to the economy shrinking at an an­nual rate of 2.1 percent in the January-March quarter, the big­gest decline since the first quarter of 2009 during the depths of the recession.

Economists say a rebound to a 4 percent growth rate in the second quarter will be fol­lowed by solid growth of around 3 percent in the overall economy in the second half of this year.