Construction Spending Hits 29-Month High

Spending across the private sector was up in May, overcoming slowed public outlays with a 50 percent year-over-year increase in new multifamily construction.

Construction spending reached an unexpected 29-month high in May, boosted by a rebounding housing market that has overcome a dip in public spending.

The May increase marked a 0.9 percent increase from the month before, driving spending to a seasonally adjusted annual rate of $830 billion, 11.3 percent above the 12-year low reached in February 2011.

The report, published July 2 by the U.S. Census Bureau, found that residential construction rose 3.0 percent in May and 8.0 percent year-over-year, to a total of $261.3 billion. New multifamily construction, which has increased every month this year, rose by 6.3 percent month-to-month and 50.3 percent year-over-year, while single-family homebuilding was up 1.8 percent and 14.8 percent respectively.

Public construction, slowed by fading stimulus dollars and tightening state and local budgets, dropped for the fifth consecutive month in May, falling 0.4 percent from April and 3.9 below the May 2011 level. This matches the lowest level since November 2006. This sector, however, will be helped by a 27-month, roughly $120 billion transportation bill scheduled for President Obama's signature Friday.