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Construction Spending Shows Steady Gains in Nonresidential Sector

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Total construction spending edged higher for the third straight month in May, as solid increases in private nonresidential and public construction outweighed a downturn in residential projects, according to an analysis of new Census Bureau data.

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“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. “These uneven patterns seem likely to continue for the rest of the year.”

Construction put in place totaled $956 billion in May, 0.1% above the upwardly revised April total and 6.6% higher than in May 2013. For the first five months of 2014, total spending rose 8.2% from the January-May 2013 total.

Private residential construction spending in May retreated 1.5% from April, when homebuilders may have put in extra hours to make up for adverse winter weather in many regions. The May total was 7.5% above the May 2013 level, representing an 11% increase in single-family spending, 31% for multifamily and a 2.4% decline in improvements to existing housing.

Private nonresidential spending rose 1.1% in May and 11% over 12 months. The largest private segment, power construction—comprising work on oil and gas fields and pipelines as well as electricity projects—rebounded 4.3% from a sharp drop in April and was up 30% year-over-year. Among other major private nonresidential segments, commercial construction—retail, warehouse and farm projects—climbed 6.5% over 12 months; manufacturing construction rose 6.7%; and office work jumped 23%.

Public construction spending rose 1.0% for the month and 1.2% year-over-year. The largest public segment, highway and street construction, expanded 2.3% from a year before. The second-biggest category, educational construction, gained 1.7% since May 2013.

“The outlook is brightest for multifamily and oil and gas-related projects, including manufacturing.” Simonson said. “But single-family and office construction, which have done well so far, may fade later this year.”



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