Highlights
Construction outlays in May slipped back into contraction after April's unexpected boost. Construction spending declined 0.9 percent after gaining 0.6 percent in April. The fall in May was worse than the market forecast for a 0.5 percent drop. The reversal in outlays in May was led by a 3.4 percent drop in residential outlays, followed by a 0.6 percent decline in public construction. Nonresidential outlays gained 0.5 percent.

On a year-on-year basis, overall construction outlays slipped to minus 11.6 percent in May, from minus 10.9 percent the month before.

Overall, construction is still is in recession as homebuilders wait for unsold supply to dwindle, commercial builders are still hamstrung by reduced corporate profits, and public outlays have been curtailed by a decline in government revenues. On today's news, bond yields were little changed while equities eased slightly. But the markets had much to digest as the ISM manufacturing index improved and came in close to expectations while the pending home sales index edged upward. Net for the morning, the economic news points closer to the bottom of recession.

Market Consensus before announcement
Construction spending unexpectedly surged in April, advancing 0.8 percent after rebounding 0.4 percent in March. The boost in outlays in April was led by a 1.8 percent increase in private nonresidential outlays with private residential construction spending rebounding 0.7 percent. The public construction outlays component, however, fell 1.8 percent, following a 2.8 percent boost the month before. Looking ahead, the odds are greater for a decline that another gain. While, housing starts jumped 17.2 percent in May, the residential component in outlays will still be impacted by prior declines in starts of 12.9 percent in April and 9.2 percent in March. Nonresidential outlays are under downward pressure from low cash reserves with businesses while state and local governments are having revenue shortfalls. Meanwhile, federal fiscal stimulus for public construction has been slow to be put into progress.

2009 Release Schedule

Released On: 1/5 2/2 3/2 4/1 5/4 6/1 7/1 8/3 9/1 10/1 11/2 12/1 Release For: Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct