(Kitco News) - The number came in at 56.4 (May) vs expectations of 56.6 and a previous reading of 58.2. This is the slowest increase since January but still in expansionary territory. One of the main takeaways from the report was the stagnation in residential homebuilding. The builders feared the cost-of-living squeeze and rising interest rates would constrain demand.
Tim Moore, economics director at S&P Global, said "Residential construction activity was close to stagnation in May, which represented its worst performance for two years amid signs of softer demand and a headwind from low consumer confidence,"
This could be an interesting time for the demand for metals like copper. At 140,975 tonnes, copper stocks in LME-registered warehouses have dropped more than 20% since the middle of May. That obviously suggests copper demand is strong. There is a fine balance between high prices and construction growth. It will be good to watch the trend of construction PMI growth around the world and how China emerges from the latest COVID restrictions.
The copper chart below (weekly) shows that the price of the red metal is consolidating at a high level. The report also noted "On a more positive note, supplier delays subsided in May, with the latest downturn in performance the least marked since February 2020. Meanwhile, rapid price pressures persisted due to rising energy, fuel and staff costs, but the overall rate of inflation eased to a threemonth low in May."
