ConDig (01-Jul-19). US construction spending took an unexpected fall in May in the wake of investment in private construction projects crumbling to its lowest level in nearly 2-1/2 years, according to latest Commerce Department figures.
Construction expenditure dipped 0.8%, the biggest drop since last November, to $1.29 billion compared with $1.3 billion in April and $1.32 billion in the year-ago period. Data for April was revised to show construction outlays rising 0.4% instead of being unchanged as previously reported.
It comes as spending on private construction projects fell 0.7% in May to the lowest level since January 2017, and followed a 1% tumble in April.
Expenditure in private residential projects edged down 0.6%, its weakest level since December 2016, after posting a 0.6% decline the month prior. Private residential construction outlays have now fallen for five straight months.
The homebuilding market continues to face headwinds despite lower mortgage interest rates, with latest figures from the National Association of Home Builders showing sales of newly built, single-family homes falling 7.8% to a seasonally adjusted annual rate of 626,000 units in May. But on a year-to-date basis new home sales for 2019 are 4% higher than the same period in 2018.
Investment in public construction projects also dipped 0.9% in May after surging 4.5% in April. Spending on state and local government construction projects slipped 0.6% after jumping 4.3% in April. Outlays on federal government construction projects tumbled 5.2% in May after surging 7.3% in April.