U.S. construction spending took a hit in May as high interest rates prompted companies and homebuilders to pull back on projects.
However, government spending increased slightly from the previous month.
Department of Commerce report Spending on construction projects fell 0.1% to $2.1 trillion annually on Monday, missing Wall Street expectations of a 0.2% increase.
Given that construction spending covers everything from housing to highways, the decline signals a slowdown in economic activity.
Construction spending in April was revised upward to a 0.3 percent increase from an initial report of a 0.1 percent decrease, making the outlook even gloomier.
Despite the monthly declines, construction spending increased 6.4% over the past year.
Within the residential sector, private residential construction declined 0.2% in May. Single-family home construction declined 0.7%, while apartment construction was flat.
The exception to the decline was manufacturing, boosted by government aid from the Curb Inflation Act and the CHIPS Act. Private sector manufacturing construction spending rose 1.3%, up more than 20% from a year ago.
Government spending increased by 0.5%, with increases in most areas of public sector construction. Highways and streets, the largest area of public construction spending, fell by 0.5%, but this was more than offset by increases in spending on education facilities, public transport, and sewerage and waste disposal.
These figures are seasonally adjusted but not adjusted for inflation.
