Construction Spending Rises to Near Eight-Year High
U.S. construction spending rose more than expected in October as outlays increased across the board, suggesting the economy remains on firmer ground despite some slowing in consumer spending and persistent weakness in manufacturing.
Construction spending increased 1% to a seasonally adjusted $1.11 trillion rate, the highest level since December 2007, after an unrevised 0.6% gain in September, the Commerce Department said Dec. 1.
Construction spending has risen every month this year and is likely to support the economy in the final three months of the year as it deals with the headwinds of a strong dollar and spending cuts by energy firms, which have undermined manufacturing. Frugal consumers also are holding back growth.
Economists polled by Reuters had forecast construction spending rising only 0.5% in October. Construction outlays were up 13% compared with October of last year.
Construction spending in October was buoyed by a 0.8% rise in private spending, which touched its highest level since January 2008. Outlays on private residential construction gained 1% and hit their highest level since December 2007, reflecting increases in home building and renovations.
Investment in private nonresidential construction projects rose 0.6% to a near seven-year high, with spending on manufacturing plants rising a solid 3%.
Public construction outlays jumped 1.4% to a five-year high as a surge in federal government spending offset a dip in investment by state and local government.
Spending on state and local government construction projects, which is the largest portion of the public sector segment, slipped 0.1%. Federal government outlays surged 19.2% to the highest level since May 2012.
