May New Construction Spending Sharply Better Than Expected

The U.S. Census Bureau reported this morning that construction spending in May rose by 0.5% to an estimated seasonally adjusted annual rate of $874.9 billion from an upwardly revised estimate of $870.3 billion in April. Compared with May 2012, spending is up 5.4%. For all of 2012, construction spending rose 9.9% year-over-year compared with 2011.

Most important here is the upward revision of $9.5 billion to the April estimate. In March, construction spending totaled $857.7 billion.

The consensus estimate by economists surveyed by Bloomberg News called for a rise of 0.6% in construction spending for May. Based on the Census Bureau's original estimate for April, May spending actually rose 1.6%, nearly three times better than the consensus estimate.

Spending on private residential construction rose 1.2% to $322.3 billion, compared with the revised April total of $318.5 billion. Private nonresidential construction rose 1.4% month-over-month, and total private construction spending was essentially flat to a revised April total of $605.4 billion.

In the private sector, single family residential construction is 33.2% higher than it was a year ago, and multifamily construction is up 51.7% from May 2012. Private commercial construction is up 0.2% year-over-year, and down 2.5% from April.

In the public sector, seasonally adjusted total spending is down 4.7% year-over-year, continuing a slide begun in September 2012. Spending on educational facilities fell 0.4% month-over-month and 10.5% from May 2012 spending. Public residential construction rose 1.6% month-over-month and is 4.1% higher year-over-year.

Construction spending in the public sector remains on the decline. In the private sector, the volatile multifamily construction spending continues to show grow of around 2% per month.

Filed under: Housing