Construction spending declines; Job openings hit six-month high; Office attendance edges lower

May’s U.S. spending on residential and nonresidential construction decreased 0.3% from the prior month and dropped 3.5% from a year earlier, as project developers remained cautious at a time of elevated costs for materials and financing.

The Commerce Department said total construction spending reached about $2.1 trillion in May, based on seasonally adjusted annual figures.

“Construction spending dropped for the ninth consecutive month, indicating that private residential outlays and business spending on structures will slump in the second quarter,” Bernard Yaros, lead U.S. economist at Oxford Economics, said in a Tuesday statement. The forecasting firm said second-quarter residential investment was on track to fall 8.1% from a year earlier, with business investment in nonresidential structures expected to slump 6.2%.

The government said May’s residential construction spending dropped 0.5% from the prior month and declined 6.5% from a year earlier, with annual drops of 4.5% for single-family and 10.9% for multifamily projects.

Nonresidential spending was down 0.2% for the month and decreased 1.1% from a year earlier, with most categories posting monthly and annual declines. Religious projects were up 11.6% from a year earlier, but lodging projects were down 8.3%, retail and warehouse construction dropped 12% and manufacturing projects declined 3.8%. 

U.S. job openings reached their highest level since November, with 7.8 million positions available at the end of May, according to the latest Labor Department data. But openings, new hires and total separations, including layoffs and resignations, posted relatively little change from the prior month.

Government figures released Tuesday showed 5.5 million hirings for the month, with separations at 5.2 million. Forecasting firm Oxford Economics said the relatively stable trends will likely help keep the Federal Reserve in a wait-and-see mode as it decides on potential interest rate reductions, after it left rates unchanged last month. The next Fed rate-setting meeting is slated for July 29-30.

The latest data from payroll services provider Paychex showed healthy but modest job growth for the past six months among the nation’s small businesses, as companies with fewer than 50 employees gauge the effects of shifting federal policies on the larger economy. Small-business hiring has risen less than a half-percent since January.

“We’re seeing many organizations take a more measured approach to strategic decision-making, including hiring, as business owners wait for greater clarity on macro issues, such as tariffs, inflation and taxes,” Paychex CEO John Gibson said in a statement Tuesday. 

A late-spring holiday and seasonal vacationing helped nudge down office traffic, with attendance for 10 large cities averaging 52.8% of their pre-pandemic level for the week ended June 25, according to Kastle Systems. That was down from 53.5% in the prior week and marked the third straight week of declines in the security technology firm’s tracking.

Even with the Juneteenth federal holiday on June 19, the 10-city average still stayed close to the peak 54.5% reached in the week ended March 5, according to anonymous keycard data from Kastle’s office property clients.

The latest figures showed Dallas leading with 61.3% of its pre-pandemic attendance, followed closely by Houston and Austin, Texas, tied at 60%. Next came Chicago at 58.3%, New York at 53.1% and Washington, D.C., at 51.6%.