U.S. Construction Spending Rose By 0.9% M/M In May

Total U.S. construction spending rose by 0.9% m/m in May, which was much stronger than the 0.2% expected by consensus and after April was revised up to a 0.6% pace (was up 0.3% before). Total construction spending is up 7.0% from last May. Strength was in private construction, up by 1.6% over April. In contrast, total public spending was down 0.4%. On a year-over-year basis, total private construction is up 13.1%, while public construction is down by 3.9%. Total residential construction spending rose by 2.9% m/m and is up 6.2% over last May. Here, the 3.0% m/m jump in private residential construction spending was only partially offset by a 0.8% m/m drop in public residential construction spending. Nonresidential construction was flat, though follows a revised 0.1% gain in April (was down 0.7%). The flat reading was because a 0.4% drop in public nonresidential construction spending offset a 0.4% gain in private nonresidential construction spending. While the report was much better than expected, it will likely be overlooked by the disappointing ISM manufacturing report.

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