Construction Spending Falls Again, Manufacturing Slows, Prices Paid Stable

- Construction Spending for May fell .4% versus estimates of a .2% increase and a .2% decline in April.
- ISM Manufacturing for June fell to 53.8 versus estimates of 55.0 and a reading of 54.4 in May.
- ISM Prices Paid for June rose to 76.5 versus estimates of 75.0 and a reading of 77.0 in May.

BOTTOM LINE: Construction spending in the US unexpectedly fell in May by the most since September 2004, as higher interest rates put the squeeze on homebuilders and commercial spending plans, Bloomberg reported. Increases in corporate construction are expected to help offset some of the drop in housing construction. I expect construction spending to continue to decelerate over the intermediate-term.

Growth in US manufacturing unexpectedly slowed for a second month in June as companies curbed expansion plans in the face of higher energy costs, Bloomberg said. The employment component of the index declined to 48.7 from 52.9 the prior month. The prices paid component fell to 76.5 versus a reading of 77 in May. I continue to believe manufacturing is in the process of slowing to around average levels as economic growth slows.