The dollar value of new construction activity on residential, non-residential, and public projects. Data are available in nominal and real (inflation-adjusted) dollars. Why Investors Care
| Released on 7/1/08 For May 2008 | ||||||||||||
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Highlights
Construction spending fell in May but there are signs of strength outside of housing. Construction outlays fell 0.4 percent, following a 0.1 percent decrease in April. The May figure was slightly less negative than the consensus forecast for a 0.5 percent decline. The May drop was led by a 1.6 percent drop in private residential outlays. However, private nonresidential spending rose 0.2 percent while public outlays advanced 0.4 percent in the latest month.
The weakness in housing is no surprise but it is good news that nonresidential and public outlays are positive. On initial reaction in the markets, equities rose but a better-than-expected ISM manufacturing number also was a supporting factor.
Weakness in the private residential component was led by a 3.4 percent decline in single-family outlays as multifamily spending rose 0.1 percent. The private nonresidential component was mixed in May and was led by gains in lodging, power, and communication categories. The gains in the nonresidential and public components will help second quarter GDP be modestly positive, adding to a moderate consumer spending increase.
On a year-on-year basis, overall construction outlays slipped to down 6.0 percent in May from down 5.1 percent in April.
Construction spending contracted further in April, dropping 0.4 percent after a 0.6 percent decline in March. The April decrease in construction spending was led by a sharp 2.3 percent fall in private residential outlays with public spending also down 0.3 percent. However, private nonresidential construction spending advanced 1.6 percent in the latest month. Essentially, housing construction is still depressed by excess supply of unsold homes and the public sector may be seeing a slowing due to budget problems at the state government level. But businesses are optimistic enough to continue to expand in the nonresidential sector.
Construction spending Consensus Forecast for May 08: -0.5 percent
Range: -0.8 to -0.1 percent
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Over the last year, a decline in residential outlays has pulled down year-on-year growth for overall construction outlays. Nonresidential and public outlays are positive with nonresidential actually strong. |
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