Construction Spending Makes Surprising Jump in May

WASHINGTON, DC-The Associated General Contractors of America points to a surprising—and rare—green shoot of economic activity after weeks of discouraging indicators. Construction spending in May reached the highest level since December 2009, fueled by a robust private-sector pipeline, especially in the residential and multifamily sectors, it reports after analyzing federal data. This growth was strong enough to offset the ongoing decline in public-sector building.

The analysis follows the recent enactment of a federal highway and transportation bill that slightly increases spending over the next two years and three months. Despite the certainty of having a federal budget in place—after nearly three years of temporary extensions–the association’s analysis still points to a construction sector that will continue to be fueled by private activity. It found that residential construction rose 3% in May and 8% year-over-year. New multifamily construction rose by 6% and an eye-popping 50%, respectively, while single-family homebuilding was up 2% and 15%. By contrast, public construction dropped for the fifth consecutive month in May, falling 4% below the May 2011 level.