The U.S. Census Bureau reported that construction spending during May 2019 was estimated at a seasonally adjusted annual rate of $1,293.9 billion, 0.8% (±1.2%) below the revised April estimate of $1,304.0 billion. The May figure is 2.3%( ±1.5%) below the May 2018 estimate of $1,324.3 billion.
During the first five months of this year, construction spending amounted to $498.8 billion, 0.3% (±1.3%) below the $500.3 billion for the same period in 2018.
In May, the estimated seasonally adjusted annual rate of public construction spending was $340.6 billion, 0.9% (±2.1%) below the revised April estimate of $343.7 billion.
- Highway construction was at a seasonally adjusted annual rate of $111.6 billion, 3.2% (±6.1%) below the revised April estimate of $115.4 billion.
- Educational construction was at a seasonally adjusted annual rate of $79.3 billion, nearly the same as (±2.6%) the revised April estimate of $79.3 billion.
Spending on private construction was at a seasonally adjusted annual rate of $953.2 billion, 0.7% (±0.7%) below the revised April estimate of $960.3 billion.
- Residential construction was at a seasonally adjusted annual rate of $498.9 billion in May, 0.6% (±1.3%) below the revised April estimate of $501.7 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $454.3 billion in May, 0.9% (±0.7%) below the revised April estimate of $458.5 billion.
“Private construction spending has been slipping for several months,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “Commercial construction spending decreased nearly 14% during the past year, which represents a stark reversal from previous trends when America’s consumer-spending-led expansion produced substantial demand for commercial construction. That said, commercial spending is up 102% compared to May 2010. Other private construction categories such as office and lodging have also been weak as rising construction and capital costs render pro formas more problematic. There are also growing concerns regarding overbuilding in certain segments/markets.
“What was different about today’s release was the decline in public construction spending,” said Basu. “While the drop was reasonably small on a monthly basis, it stands in stark contrast to the preexisting trend. With the economic expansion entering its record 11th year, state and local government finances are generally in good shape, leaving more money to spend on infrastructure. Based on broad economic dynamics and fiscal considerations, there is little reason to believe that the dip in May portends a slowdown in infrastructure spending during the months ahead.”