Construction spending in the United States experienced a rise in June, contributing to growth in both the residential and nonresidential sectors. Despite mixed demand for construction supplies, such as metals, the industry showed positive momentum.
According to the latest data from the US Census Bureau, private residential spending reached a seasonally adjusted annual rate of $856 billion. This figure represents a 0.9% increase from May’s revised rate of $849 billion and stands as the highest monthly total in 2023 so far. However, despite the growth, June’s spending was still 10.4% lower than the same period in 2022 due to previous interest rate hikes implemented by the Federal Reserve. These hikes have impeded a full recovery in home building activity following a slowdown in 2022 and much of 2023.
Breaking down the numbers further, spending on single-family home construction reached $379 billion in June, a 2.1% increase from May’s revised rate of $371 billion. Nevertheless, this figure was still 21.5% below June 2022 levels. In contrast, multi-family construction spending for June stood at $132 billion, representing a 1.5% increase from May’s revised rate and a 21.8% year-over-year increase.
On the supply side, the average price of active Comex (CME) copper in June was $3.7992 per pound, an increase of 1.2% from May’s average. However, this average remained below $4.00 per pound for the third consecutive month and marked a 7.8% decline compared to June 2022.
Regarding private nonresidential spending, the seasonally adjusted annual rate was $661 billion, remaining virtually unchanged from May’s revised rate but showing a significant 20.9% growth compared to June 2022. Manufacturing spending continued to grow month-over-month, with June’s rate reaching $195 billion, a 0.3% increase from May and an 80.7% increase year-over-year. Commercial spending increased to a rate of $121 billion in June, up 0.1% from May and 3.7% higher than the previous year.
Overall, June’s total private construction spending reached a rate of $1.517 trillion, a 0.5% increase from the revised May rate and a 1% increase from June 2022.
Public construction spending also experienced growth, with a rate of $421 billion in June, a 0.3% increase from May and a significant 13.6% increase year-over-year.
In terms of specific areas, spending on water supply reached a rate of $25 billion in June, a 1% increase from May and a 5.4% increase from June 2022. Additionally, sewage and waste disposal spending reached a rate of $39 billion, a 1.6% increase from May and a substantial 23.3% increase year-over-year. Highway and street spending stood at a rate of $129 billion in June, slightly down by 0.1% from May but still reflecting a significant 20.4% increase compared to June 2022.
Overall, total construction spending in June amounted to $1.938 trillion, a 0.5% increase from May and a solid 3.5% increase from June 2022.
The rise in construction spending in June provides a positive outlook for the US economy, showcasing growth in both residential and nonresidential sectors. Despite mixed demand for construction supplies like metals, the industry has managed to maintain its momentum. As the recovery continues, it will be interesting to monitor the impact of interest rate hikes and other factors on future construction activity.
