Construction spending increased for the third straight month in May, reflecting an increase in private nonresidential and public construction and a decrease in residential projects, according to the Associated General Contractors of America, which relies on data from the U.S. Census Bureau.
“The May figures show that construction activity continues to expand, but with lots of variability by month and project type,” said Ken Simonson, the association’s chief economist, in a statement. “These uneven patterns seem likely to continue for the rest of the year.”
Construction totaled $956 billion in May, 0.1 percent above the upwardly revised April total and 6.6 percent higher than in May 2013. For the first five months of 2014, total spending rose 8.2 percent from the January-May 2013 total.
Private residential construction spending in May declined 1.5 percent from April, when homebuilders may have put in extra hours to make up for adverse winter weather in many regions, the organization reported. The May total was 7.5 percent above the May 2013 level, representing an 11 percent increase in single-family spending, 31 percent for multifamily and a 2.4 percent decline in improvements to existing housing.
Private nonresidential spending rose 1.1 percent in May and 11 percent over 12 months and public construction spending rose 1.0 percent for the month and 1.2 percent year-over-year;
“The outlook is brightest for multifamily and oil and gas-related projects, including manufacturing.” Simonson commented. “But single-family and office construction, which have done well so far, may fade later this year.”
Association officials are concerned that highway and street construction will fall if the government fails to act on act on the Federal Highway Trust Fund. Current estimates indicate the federal government will have difficulty reimbursing states for payments to highway contractors later this month, a development that could lead to project delays and reduced construction employment.
“Stabilizing the Highway Trust Fund should be lawmakers’ top priority when they return from recess early next week,” said Stephen E. Sandherr, the association’s chief executive officer. “Construction firms, their suppliers and highway users should not be held hostage to political posturing.”