The level was higher than expected by many economists. Forecasts had called for construction spending to decline by 0.3%.

Previously, April construction spending had dropped by 1.1%, which was a larger decrease than was expected.

The May increase was due to a rise in spending on commercial projects, which made up for reductions in residential and government construction. The commercial sector was up 3.5%, hiking it to a seasonally adjusted annual rate of $225.9 billion in May.

Commercial spending increased for industrial and hotel/motel projects, but decreased for office buildings. In April, commercial projects were up 0.1%.

Government construction dropped 2.8% in May to a seasonally adjusted annual rate of $169.3 billion. Spending on schools and hospitals rose, but public housing, highways, and streets decreased. May’s decline followed a 3.1% fall in April.

Residential spending decreased 0.4% to an annual rate of $368 billion in May. New single-family homes and apartments/condominiums were down. Spending on residential construction in April dropped 0.7%.