Private Residential Construction Spending Up Nearly 2% in October

Construction spending improved across all construction segments in October, according to data compiled by the Associated General Contractors of America.

ISM said its factory activity index dipped to 48.6 in November from 50.1 in October.

Spending on federal construction surged up by 19.2% to USD27.6 billion, while spending on state and local construction edged down by 0.1% to USD277.3 billion. Outlays on private residential construction gained 1.0 percent and hit their highest level since December 2007, reflecting increases in home building and renovations.

Total private spending rose 0.8 percent to $800 billion and is up 16 percent year over year.

In October, the estimated seasonally adjusted annual rate of public construction spending was $304.9 billion, 1.4 percent (±3.0 percent) above the revised September estimate of $300.8 billion. Manufacturers boosted their construction spending by 3 percent.

Private nonresidential construction grew 0.6 percent to a seasonally adjusted rate of $403.4 billion, as construction related to education, communication and manufacturing increased.

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. Highway construction was at a seasonally adjusted annual rate of $94.1 billion, 1.1 percent (±7.1 percent) above the revised September estimate of $93.1 billion.

“The breadth of the expansion and the large number of categories with double-digit increases suggests that construction will continue growing well into 2016”, Simonson commented. “Once that happens, firms are going to bid on fewer projects, slow their schedules and worker shortages will bring more pressure on contractors to adjust their prices to meet the challenge of finding qualified craft professionals to perform the work”.