Construction spending in the U.S. increased by much less than
expected in the month of May, according to a report released by the
Commerce Department on Tuesday.
The report said construction spending inched up 0.1 percent to an annual rate of $956.1 billion in May from the revised April estimate of $955.1 billion. Economists had expected spending to increase by 0.5 percent.
The weaker than expected growth was partly due to a drop in spending on private construction, which dipped 0.3 percent to an annual rate of $682.8 billion.
Spending on residential construction tumbled 1.5 percent to a rate of $354.8 billion, while spending on non-residential construction surged up by 1.1 percent to a rate of $328.0 billion.
On the other hand, the report showed that spending on public construction climbed 1.0 percent to an annual rate of $273.3 billion.
While spending on state and local construction jumped 2.0 percent to a rate of $251.9 billion, spending on federal construction slumped 8.9 percent to a rate of $21.4 billion.
Paul Dales, Senior U.S. Economist at Capital Economics, said, "The annual revisions and May's construction spending data suggest that the rebound in residential and non-residential investment in the second quarter will be smaller than we had been expecting, but that public investment in structures will be stronger."
The Commerce Department noted that the rate of total construction spending in May was up by 6.6 percent compared to the same month a year ago.
