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U.S. construction spending rises below expectations in July

Construction spending in the U.S. rose slower than anticipated in the month of July. Total construction spending rose 0.1 percent sequentially, as compared with consensus expectations of 0.4 percent rise. Meanwhile, the data for June was upwardly revised a bit to a fall of 0.8 percent from the initial recording of a drop of 1.1 percent.. The slowdown was mainly due to a fall in private non-residential construction, with activity elsewhere in the private and public sectors being stronger.

Public-sector construction was up 0.7 percent sequentially, with both residential and non-residential activity rebounding from the softness in June to 0.3 percent and 0.7 percent, respectively. Private construction dropped at a pace of 0.1 percent sequentially, due to non-residential component. Private residential construction was up 0.6 percent sequentially.

Despite the disappointing July report, construction spending rose 5.8 percent year-on-year, a strong rate of expansion that is evenly spread throughout the private and public sectors. Unexpected softness in private residential and non-residential construction spending in July slightly lowered the third quarter tracking estimates for residential and structural investment, noted Barclays in a research report.

“On the other hand, public construction spending was a touch stronger relative to what we had penciled in, and boosted our government consumption tracking by a tenth. In all, today’s report left our GDP tracker unchanged at 2.8%, after rounding”, added Barclays.

At 17:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 62.5224. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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