Construction spending edged up 0.8% in May from April’s level but climbed a more robust 8.2% year over year, the Commerce Dept. has reported.
The latest monthly figures finished construction projects, which Commerce’s U.S. Census Bureau released on July 1, showed that the value of projects put in place in May totaled an annual rate of $1.036 trillion, adjusted for seasonal variations.
Ken Simonson, Associated General Contractors of America chief economist, observed that May's 8.2% year-over-year increase was the largest gain since March 2014, an indication of a more rapid overall construction spending pace.
For the first five months of 2015, construction spending totaled $382.1 billion, a 5.9% increase from January to May of last year.
For May, residential construction was up 0.3% from April’s level, to $366.1 billion, and also increased 8.2% from May 2014’s rate, the Census Bureau said.
Non-residential projects totaled $669.6 billion in May, a 1.1% gain from the previous month and an 8.1% gain from the year-earlier level.
Among large non-residential segments, power, the largest category, was nearly flat with April’s level, at $86.4 billion, but plunged 23.5% from May 2014’s total. That sector's results can seesaw from month to month and year to year, depending on the completion dates of energy megaprojects.
Highway and street construction increased 2.2% from April, to $85.6 billion, which was a 2.1% improvement from the year-earlier rate.
Some major segments posted small month-to-month declines in May, including educational projects, which slipped 0.8%; commercial, which was off 1.7%; health care, which dipped 0.6%; and transportation, which declined 0.9%.
Compared with May 2014 totals, however, those four sectors all recorded gains, led by commercial projects, which were up a healthy 11.4%.
Private-sector construction moved up 0.9% from April and 10.3% from the year-earlier period, Simonson noted.
"Several components of the private categories posted especially large year-over-year increases," he added. "Whether they can continue to grow depends in part on companies' being able to find enough skilled workers."
Anirban Basu, Associated Builders and Contractors chief economist, said, "Among private [non-residential] segments, manufacturing-related construction was at the front line of construction spending growth in May." Manufacturing surged 69.5% in May from its year-earlier rate.
Basu also said that that the overall nonresidential sector's January-May year-over-year increase was the largest for that period since 2007.