Construction spending dipped 0.8% in May vs. a Bloomberg Econoday consensus estimate of +0.6. The result was well below the low end range of estimates from 09.3% to plus 1.9%.
Construction spending for April, initially reported at -1.8%, is now listed at -2.0%.
Construction Spending Year-Over-Year
Highlights
Construction spending proved surprisingly weak in May, down 0.8 percent vs expectations for a 0.6 percent gain. The decline follows an even steeper and downwardly revised 2.0 percent drop in April. Spending on single-family homes, despite the rise underway in housing starts, fell 1.3 percent in May for a third straight decline with the year-on-year gain moving slightly lower to a still constructive 6.3 percent. Spending on multi-family homes has been much stronger, up 1.8 percent in the month for a 23.9 percent year-on-year gain.
Construction spending on non-housing has been very soft with May down 0.7 percent following April’s 0.1 percent dip. Year-on-year, private nonresidential spending is up 3.9 percent led by the office category and pulled down by manufacturing. Public spending on buildings and highways has been flat to slightly negative.
Housing is on the climb this year but a gradual one, which has its positives given the bubbles of the past. The construction sector as a whole still looks to be a positive contributor to overall economic growth.
Recent History
Bouncing back from a 1.8 percent plunge in April, construction spending is expected to rise a consensus 0.6 percent in May. Construction spending has seen bursts of strength this year even though the year-on-year rate is at a 3-year low of only 4.5 percent. But details in this report have been favorable especially an 8.0 percent year-on-year gain for residential spending, the result of strength in both new home sales and also home improvements.
More Report Details
Total construction spending is up only 2.8% from a year ago. Year-over-year strength is heading downhill fast.
Residential single family construction is down for the third consecutive month, but multi-family construction is still strong, up 1.8% on the month and 23.9% from a year ago.
For those who wish to see more details, here’s a link to the Census Bureau report on Construction Spending.
Mike “Mish” Shedlock
Monetary stimulus is working! Just like in Japan! If only we can convince people to keep interest rates at zero, or negative, for the next 30 years!
Oh, and raise taxes. Nothing sells houses like out of control red tape and too many corrupt government officials — ruling with contempt over unemployed voters
Home prices in cities with jobs are already way too expensive. Unless wages increase, I don’t see how people will be able to afford those homes. It’s either you over pay for a home in a place where there are good paying jobs or you pay a reasonable price for a home in a city with very few good paying jobs.
The latest racket, at least in Cali, seems to be to sell the homes to well connected, essentially freely funded, funds. Who then turn around and ensure captive politicians only ever approve building in less and less attractive locations in the future. Then they rent the latest, shoddily constructed shitholes out to people with few other options, or if lucky, sell the $150K to construct unit for $750K to Mr. and Ms. (Or, in Cali, Mr. and Mr.) Mooch. So that a state protected realtor and mortgage broker can collect a few percent each and laugh all the way to the bank.
When mooches run out, the same politicians crank up the taxes and fees on the few less well connected people who still remain semi solvent. To pay for filling the shitholes with people receiving housing subsidies. In exchange fro them voting for more of the same in the future. The politicians are really nice that way, caring about the poor and all. So says The Man on TV, who progressives have been told took over the job from the God Nietzsche killed.
Mish, check the revisions.
May’s report has substantial UPWARD revisions for January, February, March, and April total construction.
http://www.census.gov/construction/c30/pdf/pr201604.pdf
http://www.census.gov/construction/c30/pdf/release.pdf