Construction Spending in May Lowest in Five Years

Washington, DC, July 2, 2009--U.S. construction spending fell 0.9 percent in May to the lowest rate in more than five years, according to Commerce Department data released on Wednesday.

The drop was more than expected, with economists forecasting a fall of only 0.5 percent. April's spending was revised downward to an increase of 0.6 percent from March, compared to the 0.8 percent increase originally reported.

Total spending in May was at a seasonally adjusted annual rate of $964 billion, which was the lowest since March 2004. Construction spending fell for six consecutive months before April's increase.

Private construction dropped 1 percent in May to a rate of $649 billion, the lowest in six years. Residential construction, which makes up more than a third of private building, slipped 3.4 percent to its lowest level since December 1995.

Public construction dipped 0.6 percent in May. Highway and street construction fell 1.3 percent, and power plant construction was down 6.5 percent. Transportation spending rose 0.6 percent, and education was up 0.5 percent, Commerce said.