U.S. construction spending fell during July, pulled down by the housing slump for the largest decline in five months.

Total spending decreased by 0.6% to a seasonally adjusted annual rate of US$1.084 trillion, the U.S. Commerce Department said today. June spending rose by 0.3%; originally, the government said spending that month fell 0.4%.

The 0.6% decrease in July outlays was bigger than projected. Wall Street had expected construction spending for the month would decline by 0.5%. It was the biggest decrease since a 0.9% drop in February.

Residential construction spending decreased 2.1% to US$365.6 billion. Residential spending dropped by 1.3% in June; it was originally seen down 1.7% for the month. Year over year, residential was 27% lower in July.

Nonresidential construction spending increased in July, rising 0.2%,

Separately, a private research group said U.S. manufacturing activity contracted slightly in August.

The Institute for Supply Management said its reading for U.S. manufacturers fell to 49.9 from 50 in July. The August number meets economists’ prediction of a reading of 49.9. A reading below 50 signals contraction.