Construction spending improved in June, up 0.2%, according to numbers released today by the U.S. Census Bureau. The boost came from the private nonresidential sector, which reported a 1.8% gain in May, thanks to a strong showing from commercial, communication, and manufacturing activity.
It was the fourth month in a row that private nonresidential construction showed improvement, a sign that "it may have at last hit bottom," says Mike Montgomery, economist at IHS Global Insight. Also encouraging was the fact that gains are showing up in a variety of industries, rather than being concentrated in power plants, he says.
Private residential spending declined 0.3% for the month. However, once residential improvements—a notoriously unreliable indicator—are subtracted, the loss shrinks to 0.1%. (Cutting residential improvements loose allows June’s overall construction spending improvement to rise to 0.4%.)
New single-family homes gained 0.3% from May, while declining 10.6% on an annual basis. Multifamily spending was lower on both a monthly and yearly basis, dropping 2.8% and 10.4, respectively. However, while the small single-family gain appears to be just another bump along the bottom, there’s hope on the horizon for the multifamily sector, where starts and permits have been turning around, Montgomery says. Given that construction spending estimates are calculated based on starts, "spending on multifamily housing should improve going forward."
Claire Easley is a senior editor at Builder.
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