US construction spending down 0.3% in May
WASHINGTON – US construction spending declined 0.3% in May. Growth in housing construction, the foremost performer in the economy, slowed while activity in areas hardest hit by the pandemic continued to show weakness.
The Commerce Department reported Thursday that the May decline followed a slight 0.1% increase in April, and total construction spending rose 7.5% year over year.
Housing construction, which was a driving force behind the economy during the pandemic, saw a tiny 0.2% gain in May as single-family housing construction rose 0.8% while apartments and other apartment buildings remained flat. Last year residential construction increased by 28.7% and single-family house construction by a whopping 46.1%.
Non-residential construction activity declined 1.1% in May, with hotel and motel construction and the category that includes shopping malls, two areas hit hard by the pandemic closings, both declining. Last year, non-residential construction fell 5.8%, while the hotel and motel category fell 23.2%.
Spending on government projects fell slightly by 0.2% in May and is down 8.7% last year, reflecting pressure on many levels of government from falling tax revenues.
Nancy Vanden Houten, an economist at Oxford Economics, said she believes the huge gap between housing and non-housing will narrow “as private investment in non-residential properties rebounds as the recovery accelerates”.
She said supply chain restrictions on lumber and other building materials could dampen growth in both residential and non-residential spending for a while. However, she said the recent slump in timber prices should ease cost pressures after a sharp rise in prices.
The various changes in May resulted in a seasonally adjusted annual rate of $ 1.545 trillion.
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