Key Highlights

• US construction spending rose 0.1 percent month-over-month in May to a seasonally adjusted annual rate of 2,210.2 billion dollars.

• Residential construction spending increased 0.3 percent while nonresidential spending slipped 0.3 percent.

• Public construction spending rose 0.5 percent, with gains in educational and highway categories.

• Year-to-date construction spending through May totaled 858.4 billion dollars, down 2.7 percent from the same period in 2025.

Modest Growth Masks Diverging Sector Trends

Total US construction spending edged up 0.1 percent in May to a seasonally adjusted annual rate of 2,210.2 billion dollars, according to Census Bureau data, following a downwardly revised 0.3 percent increase in April. The May figure came in below economist forecasts of a 0.2 percent gain.

Despite the monthly increase, spending remained 1.5 percent below the May 2025 level, and cumulative spending for the first five months of 2026 stood 2.7 percent lower than the comparable period last year. This suggests underlying softness persists even as month-to-month figures show incremental improvement.

Residential Strength Offsets Nonresidential Softness

Private residential construction spending rose 0.3 percent to a seasonally adjusted annual rate of 930.2 billion dollars in May, providing the primary source of monthly growth. Private nonresidential spending, by contrast, declined 0.3 percent to 738.7 billion dollars.

Within nonresidential categories, manufacturing construction fell 1.4 percent, while power and commercial construction slipped 0.2 percent and 0.3 percent respectively. These declines were partially offset by gains in office construction, up 0.2 percent, and educational construction, up 0.3 percent.

Public construction spending increased 0.5 percent to 541.2 billion dollars, with both educational and highway construction categories posting gains of roughly 0.6 percent each.

Uneven Recovery Reflects Broader Economic Crosscurrents

The modest overall gain in May could indicate stabilizing conditions in residential construction, potentially supported by easing supply chain pressures following the resolution of Middle East-related disruptions. However, the continued decline in manufacturing construction may reflect broader caution among industrial firms regarding capital expenditure amid ongoing tariff and trade policy uncertainty.

The divergence between residential strength and nonresidential softness could persist if interest rate expectations remain elevated, potentially weighing more heavily on large-scale commercial and industrial projects than on housing activity. Public sector spending gains in infrastructure categories like highways may provide a partial offset to private sector softness, though the scale of that support is likely to depend on future government budget allocations.

Conclusion

May's construction spending data reflects a sector navigating uneven conditions across residential, nonresidential, and public categories. While overall spending posted a modest gain, the year-over-year decline suggests the sector has not fully recovered from broader macroeconomic headwinds affecting capital-intensive investment decisions. Coming months are likely to reveal whether residential strength can continue offsetting persistent softness in manufacturing and commercial construction.