Economist's Insights

Construction Spending Rose on Stronger Private Residential, Government Outlays

Jul 2, 2018

Construction spending rose 0.4% in May, 0.1% less than expected, and there was a mix of revisions to the April (smaller gain) and March (smaller decline) data. On balance, the most recent trend is only slightly softer than expected. Private residential investment, which accounts for just over 40% of total construction spending, rose 0.8% MoM and helped absorb a 0.3% decline in Dollars spent on nonresidential projects. Within the residential activity, all three categories improved over April levels: single family homes +0.6%, multi-family housing +1.6%, and home improvement +0.9%. In the public sector, spending on non-residential structures, which account for essentially all government spending, extended its strong recent run. For the three months ended in May, total government construction spending rose at a greater-than-17% annualized pace, thanks in large part to a skyward trendline at the state and local level.