Construction Outlays Drop for 2nd Month

The construction industry remained in a slump in May as spending dropped 0.4% for its second straight monthly decline, the Commerce Department said Monday.

“Private spending has been weak and probably will remain weak for the next few months,” said David Berson, chief economist for the Federal National Mortgage Assn. Government spending on construction will also slow “given the large budget deficits at all levels.”

Added David Seiders, chief economist for the National Assn. of Home Builders: “The second quarter certainly is shaping up to be a negative.”

The Commerce Department reported that residential, non-residential and government construction spending totaled a seasonally adjusted annual rate of $445.6 billion after falling 2.2% in April.

The April decline was even worse than the 0.7% drop first reported last month. March spending, on the other hand, was revised upward from a 0.7% decrease to a 0.4% increase.

Residential construction fell 2.2% to an annual rate of $199.7 billion after a 1.4% decline in April. Single-family building dropped 3.9% to $115.8 billion on top of a 3.8% decline a month earlier.

CONSTRUCTION SPENDING

Billions of dollars, seasonally adjusted:

May, ‘90: 445.6

Apr, ‘90: 447.2

May, ‘89: 434.7

Source: Commerce Department