The value of construction put in place in May is down 0.1 percent from April after an upward revision to up 0.3 percent in April. The May percent change is below the consensus of up 0.3 percent in the Econoday survey of forecasters. The report includes annual revisions back through January 2022 for unadjusted data and back through January 2017 for seasonally adjusted data. Construction spending is up 6.4 percent year-over-year.

Spending on private residential construction is down 0.2 percent in May but up 6.5 percent compared to May 2023. Spending on single-family homes is down 0.7 percent in May from April while spending on multi-unit homes is unchanged from the prior month. Spending on home renovation and repair total private residential spending less spending on single- and multi-unit homes is up 0.3 percent in May from April. In April and May the average rate for a Freddie Mac 30-year fixed rate mortgage hovered around the 7-percent mark. Even though housing stock of existing units remains limited, demand for new home construction has been dampened by high prices and elevated mortgage rates.

Spending on private nonresidential building is down 0.3 percent in May but up 4.1 percent compared a to a year ago. Most categories on nonresidential spending are down, but manufacturing which accounted for nearly a third of private nonresidential construction is up 1.3 percent from the prior month and up 20.2 percent from May 2023. This suggests ongoing investment in infrastructure for the factory sector.

Public sector construction is up 0.5 percent in May from April and up 9.7 percent compared to a year ago. A majority of types of public nonresidential spending are up in May. The largest share of spending is in highway and streets which is down 0.5 in May from the prior month but up 9.2 percent year-over-year. The second largest share is educational projections which are up 0.6 percent in May from April and up 6.6 percent compared to a year ago.

Construction spending is expected to increase 0.3 percent on the month in May versus April's 0.1 percent decline. Year-over-year, spending was up 10.0 percent in April.

The dollar value of new construction activity on residential, non-residential, and public projects. Data are available in nominal and real (inflation-adjusted) dollars.

Construction spending has a direct bearing on stocks, bonds and commodities because it is a part of the economy that is affected by interest rates, business cash flow and even federal fiscal policy. In a more specific sense, trends in the construction data carry valuable clues for the stocks of home builders and large-scale construction contractors. Commodity prices such as lumber are also very sensitive to housing industry trends.

Businesses only put money into the construction of new factories or offices when they are confident that demand is strong enough to justify the expansion. The same goes for individuals making the investment in a home.

A portion of construction spending is related to government projects such as education buildings as well a highways and streets. While investors are more concerned with private construction spending, the government projects put money in the hands of laborers who then have more money to spend on goods and services.

On a technical note, construction outlays for private residential, private nonresidential, and government are key inputs into three components of GDP--residential investment, nonresidential structures investment, and the structures portion of government expenditures.

That is why construction spending is a good indicator of the economy's momentum.