Surprise Jump in Construction Spending - Highest Monthly Gain in a Year

Construction spending in May unexpectedly rose +.9% MoM (consensus +.1%). This was the largest monthly gain since March 2006. In addition, last month's figure was revised higher to +.2% MoM from +.1%. All of the gain was in non-residential construction. Every category gained except residential.

Non-residential construction grew 2.5% MoM in May, and is up +15% YoY. Construction of hospitals and highways pushed up public building by +2.2% MoM. Private non-residential rose +2.7%, driven by factory and utility demand.

Homebuilding remains sluggish, falling -.8% MoM (-17.3% YoY). Within the residential category, private growth fell -.8% MoM (-17.6% YoY), but public projects rose +4.2% MoM (+13.5% YoY).

Federal construction grew twice as fast at state and local in May at 4.1% versus 2.1%, but over the last year state and local has led the charge, growing by +11.5% YoY versus Federal growth of +8% YoY.