The commerce department reported a 0.8% unexpected gain in construction spending for April, marking a two month consecutive increase despite predictions that spending would drop 1.2%.  

Sageworks Index data also supports a rise in construction activity, but for an additional consecutive month as the data below indicate that sales rose 4.55 % in May after rising 2.94 % in April and 1.66 % in March.

Housing starts also showed a surprising 17.2 % increase in May after a 12.9% drop in April. While housing starts provide an outlook for future construction activity, the large number of unsold homes on the market will be a limitng reactant for new growth in residential construction.

In a recent recent blog post titled, “I Repeat: It’s Not Just A “Wall Street Bailout”

Brian Sullivan of Fox Business reminded readers that the housing crisis is not an island to itself, and explained that there are a number of industries that all benefit from home transactions. Sageworks data agrees, and shows that industries related to home building and housing have all been adversely affected by the crisis.

When Sageworks, Inc.’s data was mined for those privately held industries with the slowest sales growth over the last 12 months, it confirmed that a number of housing related industries such as furniture stores, lumber wholesalers, and building materials companies now rank among industries reporting the slowest sales growth in the US over the last 12 months.

Those Industries listed in the top 10th percentile for the slowest sales growth over the last 12 months includes the following:

Brian Sullivan also explained that consumer spending was 70% of the economy, and much of that was related to housing. Historically, the ability to borrow and spend has tracked closely with real estate prices. With that in mind, watch retail spending and especially the auto industry (see previous post), where the consumers ability to borrow is directly related to auto sales.