Washington, DC, July 1--Construction spending rose 0.3 percent in May to a record annual pace of $988.5 billion, led by work on housing, a government report showed.
The increase, the fourth in a row, followed a revised gain of 1.2 percent in April, the Commerce Department said in Washington. Residential construction, accounting for more than half the total, rose 0.8 percent to a record $532.3 billion.
New home sales surged 15 percent in May to a record annual rate, the Commerce Department reported last week. Home construction is seen adding to economic growth in coming months as builders fill orders, economists said. The number of houses sold and waiting to be started rose to the second-highest level ever, the latest sales figures show.
Economists had forecast a 0.7 percent increase to $977.2 billion at an annual rate in May construction spending after a previously reported 1.3 percent April rise, according to the median of 50 estimates in a Bloomberg News survey. Today's report included revisions back to 2000.
Construction includes new buildings, renovations and additions to existing structures. The value of construction is the sum of work done on all projects under way during a given period. This includes the cost of materials installed or erected and the cost of labor and engineering.
All private construction rose 0.4 percent to $751.2 billion in May after rising 1.2 percent in April.
The value of public construction fell 0.2 percent, the first decline in three months, to $237.4 billion at an annual rate, led by reduced spending on schools, hospitals and waterworks. Federal construction spending fell 1.3 percent to $17.7 billion. State and local spending fell 0.1 percent to $219.7 billion.
An exception to the decline was government spending on transportation projects, which rose 0.9 percent to $19.8 billion, and was up 4.5 percent from a year earlier. Spending on roads and highways rose 0.1 percent to $68.5 billion.
Private nonresidential building fell 0.4 percent to $218.9 billion, led by declines for communications structures and office buildings. Construction of office buildings fell 0.8 percent in May to a $32.2 billion pace.
Investment increased in factories and related buildings, rising 3.9 percent to $14.3 billion.
