Private nonresidential construction spending continued its upward trend in May, increasing 0.5 percent. This makes the fifth straight month of spending increase, according to the July 1 report by the U.S. Census Bureau. However, on year-over-year basis, private nonresidential construction is down 3.3 percent. Overall, total nonresidential construction spending - including both private and public - is up 0.1 percent from April to $716.7 billion, but down 0.4 percent from May 2008.

Nonresidential construction sectors showing gains include manufacturing, up 4.3 percent, power, up 2.1 percent, and transportation construction, up 1.4 percent. From May 2008, manufacturing has seen the largest increase, up 55.2 percent, followed by conservation and development, up 13.5 percent, and power construction spending, up 12.6 percent.

On the other hand, commercial construction spending continues to perform poorly, down 5.1 percent on a monthly basis while religious construction, down 3.8 percent, and lodging, down 2.6 percent, were the worst monthly performers. On a year-over-year basis, communication construction still lags, down 28.7 percent, followed by commercial, down 28.4 percent, and lodging, down 17.8 percent.

Public nonresidential construction spending was down slightly at 0.5 percent from April but was up 3.5 percent on a year-over-year basis. Residential construction spending slipped 3.5 percent for the month and is down 33.3 percent from May 2008. Overall, total construction spending was down 0.9 percent compared to April and was 11.6 percent lower than levels in May 2008.

What This Means
"Until now, much of the talk about the stimulus package has been just that, talk," said Associated Builders and Contractors Chief Economist Anirban Basu. "We now approach the moment of truth. The stimulus package should have its maximum impact during the third quarter of this year, adding roughly 3 percent to annualized Gross Domestic Product.