U.S. construction spending unexpectedly falls in May

Reuters

WASHINGTON – U.S. construction spending unexpectedly fell in May as single-family homebuilding stalled, more evidence that the Federal Reserve’s aggressive monetary policy tightening was slowing the economy.

The Commerce Department said on Friday that construction spending slipped 0.1% in May after increasing 0.8% in April. Economists polled by Reuters had forecast construction spending would rise 0.4%. Construction spending increased 9.7% on a year-on-year basis in May.

Spending on private construction projects was unchanged in May after advancing 1.1% in April. Investment in residential construction rose 0.2%, though spending on both single-family and multi-family housing projects was flat.

The average contract rate on a 30-year fixed-rate mortgage has jumped close to 6% as the Fed raises interest rates to tame inflation.


Data last month showed consumer spending rose modestly in May while housing starts, building permits and factory output softened, heightening risks of a recession.


The U.S. central bank in June raised its policy rate by three-quarters of a percentage point, its biggest hike since 1994. Another similar-sized rate hike is expected in July. The Fed has increased its benchmark overnight interest rate by 150 basis points since March.

Investment in private non-residential structures like gas and oil well drilling fell 0.4% in May.

Spending on public construction projects declined 0.8% after slipping 0.3% in April. Outlays on state and local government construction projects dropped 0.8%, while federal government spending tumbled 1.7%.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

tagreuters.com2022binary_LYNXMPEI601RO-BASEIMAGE

You appear to be using an ad blocker

Shore News Network is a free website that does not use paywalls or charge for access to original, breaking news content. In order to provide this free service, we rely on advertisements. Please support our journalism by disabling your ad blocker for this website.