Construction spending unexpectedly fell in May as home building slowed and activity in areas most directly impacted by the pandemic showed persistent weakness.
The Commerce Department reported Thursday that spending on construction projects declined 0.3 percent. Compared with a year ago, spending was up 7.5 percent.
That was below the consensus forecast of a 0.5 percent gain. But the disappointing number was somewhat offset to upward revisions to earlier months.
Construction was considered an essential service throughout most of the country, so it did not suffer the sharp declines seen in so many other areas of the economy last spring. But certain types of construction—such as malls, hotels, and offices—have since seen sharp declines. Lodging is down 23.3 percent from a year ago, office construction is down 8.3 percent, and shopping center construction has tumbled 18 percent.
Residential construction rose 0.2 percent in May and is up 28.2 percent over the past year.
Spending on new single family homes rose 0.8 percent in May. Compared with a year ago, it is up 46.1 percent.
Spending on public construction projects fell 0.2 percent, the fifth straight monthly decline, and is down 8.7 percent compared with last year.
Non-residential construction fell 0.7 percent, the sixth consecutive monthly decline. On an annual basis, non-residential construction is down 7.1 percent over the last 12 months.
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