The decline in total construction spending continued in May with initial estimates coming in at 0.8% lower than the revised April figures. Private construction, the bulk of the spending, was off 0.7% compared to April, but down 6.3% on a yearly basis. Public construction slowed almost 1 percent in May compared to April but recorded a solid 10.8% gain on the year.
Within the private spending category, residential construction continued on a downward trend led by single-family homes. These have been in high demand and short supply, especially for entry-level buyers, but some builders are trying to shift downstream from building more expensive homes. Compared to May last year, spending on residential construction overall has fallen by over 11%. The bright spot was new, multifamily construction spending, which increased by 1.9% compared to April and more than nine percent year-on-year.
Nonresidential construction spending slipped 0.9% compared to April but was flat for the year. A sharp, 15 percent drop in commercial building construction, compared to the previous year, drove losses. In contrast, private spending on construction for manufacturing posted a 14% gain on the year.
Public construction spending dropped almost one percent in May versus April but added nearly 11% year-on-year. Much of that appeared in basic services like sewage and waste, up 1.6% on the month and up more than 18% for the year. About one third came from spending on highways and streets, which is much needed considering the rough shape many of our roads and highways are in.
While we are in the longest economic expansion on record, we are starting to see key indicators show signs of slowing. Real GDP for the second quarter is tracking 2.1%.
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