U.S. construction spending fell more than expected in July as housing activity dropped to the lowest level in seven years and non-residential construction activity fell for the first time in seven months, the government said Tuesday. The Commerce Department reported that construction spending fell 0.6 percent in July, double the 0.3 percent decrease expected by analysts. Residential housing activity fell for the 16th consecutive month, falling 2.3 percent to an annual rate of $357.8 billion, the lowest level since early 2001, the beginning of the last U.S. recession. Non-residential construction activity, which had been offsetting some of the weakness in the residential sector, also fell in July, declining 0.7 percent to an annual rate of $416.8 billion. Analysts are concerned that non-residential construction will weaken in coming month as banks—hurt by big losses on mortgage loans—tighten lending standards. Overall, construction spending totaled $1.084 trillion at an annual rate in July. Construction spending is 4.7 percent below last year's level, representing one of the biggest problems in the economy.
