Construction spending increased in May across the board. Nonresidential construction continued to grow, while residential construction increased for the first time in over a year:
Nonresidential construction was up at an annualized rate of 4%. Residential construction spiked upward at a 17% rate, though it was still 13% lower than a year ago.
The nonresidential number is strongly affected by various government spending programs (CHIPS, IRA) but its continuing strength is still a good sign for the health of the economy. The residential number is a bit of a mystery, but possibly indicates that the bust in the housing market is starting to turn around.
Ignorant question: With all the stories about commercial real estate in crisis, why the increase in non-residential construction? Is it factories?
Lots of it includes schools, hospitals, and non-industrial commerce sites such as distribution centers.
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Fabs, such as chip factories, cost billions of dollars each. High tech manufacturing are also very expensive, with hundreds of millions of dollars in automation.
Part of this, noted as "Bidenomics", is the repatriation of manufacturing (through the CHIPS Act) supported by the maintenance of the Trump tariffs.