U.S. construction spending flat in May, less residential and structures investment expected in Q2

Construction spending in the U.S. disappointed in May, coming in contrast to consensus expectations. U.S construction spending was flat in the month, as compared with consensus expectations of a modest rebound of 0.3 percent sequentially. The data for April was revised upwardly to show a more modest drop of 0.7 percent as compared with the earlier reading of a drop of 1.4 percent. This upward revision partially led to the disappointing figure for May.

Delving into details, private construction spending dropped 0.6 percent sequentially, led by declines in both residential and non-residential categories. Most of the decline in the private residential investment category was due to multifamily construction that dropped by an unexpected 3.3 percent on the month. In the meantime, public construction spending recovered strongly, led mainly by the residential construction category, stated Barclays in a research report.

The weaker-than-expected report, along with revisions to earlier months’ data suggest slightly less residential investment and structures investment in the second quarter than was anticipated earlier.

“After rounding, we revised lower our Q2 GDP tracking estimate by one-tenth to 2.4% q/q saar”, added Barclays.

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