U.S. construction spending rises sequentially in May

U.S. construction spending rose sequentially in May. Spending was up 0.4 percent sequentially, owing to strong growth in residential private spending and public construction spending. The reading was slightly weaker than consensus had expected, though the release of the May data came with historical revisions to the construction spending data, which clouds comparisons with expectations, noted Barclays in a research report.

Private construction spending rose 0.3 percent on the month, driven by a strong 0.8 percent rise in residential spending, which was sufficient to counter the 0.3 percent fall in non-residential spending.

All three components of residential spending rose on the month. Single-family residential spending rose 0.6 percent sequentially, and multi-family spending rose 1.6 percent. Along with a 0.9 percent sequential rise in home improvements, the data on private residential spending for May led to revise the tracking estimate for growth in residential spending higher in the quarter, stated Barclays.

Within the public sector level, both residential and non-residential spending rose in the month. In this category, state and local construction spending rose 0.6 percent, causing a modest upward revision to the tracker for growth in government consumption and investment.

“Altogether and despite the softer headline reading relative to our expectation, the components of the May construction spending data that feed into our GDP tracker boosted our tracking estimate for Q2 US real GDP growth by two-tenths, to 4.9% q/q saar”, added Barclays.

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