Construction Spending Sees Slight Drop in May

WASHINGTON D.C. — Construction spending fell 0.9 percent in May, according to a report released Friday the Commerce Department. This is the third straight decrease, according to the Commerce Department. In addition, government revisions switched four of the first five months of this year from gains to declines. On the flip side, construction in May was up seven percent from the same time last year.

Spending on private construction was at a seasonally adjusted annual rate of $856.2 billion, 1.6 percent below the revised April estimate of $870.5 billion. Residential construction was at a seasonally adjusted annual rate of $614.3 billion in May, 1.7 percent below the revised April estimate of $624.7 billion. Nonresidential construction was at a seasonally adjusted annual rate of $241.9 billion in May, 1.6 percent below the revised April estimate of $245.8 billion.

“Surprisingly, private residential construction has been slipping, according to the revised data,” Ken Simonson, Association of General Contractors chief economist, said. “The seasonally adjusted annual rate for May was five percent lower than the record set in February, and that has dragged down the overall total. But on a January–May basis, residential is still up a robust 13 percent from the same months of 2004.”

The estimated seasonally adjusted annual rate of public construction spending in May was $246.8 billion, 1.7 percent above the revised April estimate of $242.8 billion. Educational construction was at a seasonally adjusted annual rate of $64.6 billion, 0.8 percent above the revised April estimate of $64.1 billion. Highway construction was at a seasonally adjusted annual rate of $64.9 billion, 0.1 percent above the revised April estimate of $64.8 billion.

Simonson noted that the Census Bureau had boosted its preliminary estimate of construction for 2004 from $1 trillion to nearly $1.03 trillion and the seasonally adjusted annual rate for April 2005, reported last month as $1.07 trillion to $1.11 trillion.

“That suggests that the monthly figures for recent months may also be substantially revised in the future.”