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Residential Construction Drives Growth in Construction Spending, Signaling Positive Economic Outlook


Published / Modified Jul 01 2024
Source: U.S. Census Bureau, CSIMarket Team / CSIMarket.com


Construction Spending Increases Led by Residential Construction

In May 2024, construction spending showed a promising increase, driven by a rise in residential construction.
According to the Commerce Department's report, spending on construction projects grew by 1.9% compared to the previous month on a seasonally adjusted basis.
This growth in residential construction indicates that more Americans are financially able to purchase their own homes, reflecting a positive economic environment.

Construction spending is often considered an indicator of long-term investments, which tend to flourish in a robust economy.
Compared to the same month in the previous year, construction spending experienced an impressive jump of 9.9%. However, the growth in private construction outlays was slightly lower than the overall construction growth.

Among the various categories, public construction outlays increased by only 0.1% on a seasonally adjusted basis, comprising less than half of the total construction growth.
The rise was primarily driven by nonresidential construction in amusement, recreation projects, and commercial buildings.
Conversely, spending on power and utilities projects witnessed a decline.

Private residential spending, an important economic indicator, now accounts for 43.48% of total construction spending.
This sector holds significant influence as it requires a substantial amount of raw materials and finished goods to build and furnish homes.
Over the last 12 months, public construction outlays experienced a remarkable surge of 15.3%.
Private construction projects saw a substantial increase of 3.1%, accelerating on a seasonally adjusted basis.
This growth was predominantly fueled by nonresidential outlays in transportation and power projects.
However, there was a notable setback in the business sector as investments for the construction of commercial buildings declined.

Overall, the increase in construction spending, particularly in residential construction, indicates a positive trend in the economy.
The rise in private construction outlays and the growth in public construction projects both contribute to economic expansion.
Shareholders in the construction industry can anticipate improved profitability as the demand for construction services continues to grow.









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