Overall construction spending improving
According to new data from the U.S. Census Bureau of the Department of Commerce, construction spending during May 2012 rose 0.9 percent to an annual rate of $830.0 billion, the highest level since December 2009. This increase followed an upwardly revised 0.6 percent rise in April.
Construction spending in May is up 7.0 percent above the May 2011 estimate of $775.8 billion, and the Department of Commerce is reporting that during the first five months of 2012, construction spending totaled $310.5 billion, 9.4 percent above the same period in 2011.
Many look to this economic indicator as a sign of health in the overall market, as building implies the ability to get at least some lending, and a sign of buyers, depending on the sector.
Private vs. public construction levels
Spending on private construction was at a seasonally adjusted annual rate of $560.4 billion, 1.6 percent above the revised April estimate of $551.8 billion.
Residential construction rose 3.0 percent for the month to $261.3 billion in May, and nonresidential construction rose 0.4 percent. Spending on multifamily residential projects jumped 6.3 percent, while investment in single family buildings rose 1.8 percent.
Public construction actually fell 0.4 percent for the month, with educational construction spending down 3.0 percent, and highway construction falling 0.5 percent.
While the American economy has quite a long road ahead toward recovery, spending is a positive sign as investment in the residential sector improves. Real estate has been one of the hardest hit sectors in the economy, and new home construction has been one of the hardest hit sectors within real estate, making spending a promising sign for the market.
Residential construction is expected to be the bright spot in the economy, contributing to the nation’s growth in 2012 for the first time in eight years.