- Construction Spending for April fell .4% versus estimates of a .6% decline and an upwardly revised .6% decline in March.
- ISM Manufacturing for May rose to 49.6 versus estimates of 48.5 and a reading of 48.6 in April.
- ISM Prices Paid for May rose to 87.0 versus estimates of 85.0 and a reading of 84.5 in April.
BOTTOM LINE: Spending on US construction projects in April fell for the sixth time in seven months, Bloomberg reported. Private residential construction spending fell 2.3% after a 3% decline the prior month. Private non-residential construction gained 1.6%, the third straight monthly gain. Total non-residential construction is up 11.6% from year ago levels. Homebuilding in 1Q fell at an annual pace of 25.5%, the most since 1981, and subtracted 1.17 percentage points from overall growth. However, the US economy still grew at an upwardly revised .9% rate during 1Q. While construction will remain muted over the intermediate-term as homebuilders pair inventories, it should begin subtracting less from overall growth as the rate of decline slows.
Manufacturing in the US came in better-than-forecast in May, easing concern the economic slowdown will intensify, Bloomberg reported. The New Orders component of the index rose to 49.7 versus 46.5 the prior month. The Production component rose to 51.2 from 49.1 in April. The Export component surged to 59.5, the highest since May 2004, versus 57.5 in April. The Inventory component of the index fell to 48.0 versus 48.1 the prior month. The Employment component of the index rose to 45.5 from 45.4 the prior month. ISM Manufacturing should show expansion, a reading above 50.0, over the coming months as companies rebuild inventories, the effects of fiscal/monetary stimuli take hold, exports remain strong and auto manufacturing accelerates. I still expect the Prices Paid component to fall meaningfully from current levels through year-end.
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