Non-Residential Weak But Construction Spending Beat Consensus

The non-residential sector gets a downgrade in today's construction spending report where the headline increase, at 0.3 percent in September, nevertheless beats the consensus by 3 tenths. Private non-residential spending, however, fell a steep 0.8 percent following a sharply downward revised 0.7 percent decline in August. Year-on-year, this reading is down 3.8 percent with weakness most evident in manufacturing and office building that offsets gains for commercial building.

The residential side, though unchanged in September, shows much more strength with a year-on-year rise of 9.6 percent. Spending on both new single-family and new multi-family homes actually increased in the month, up 0.2 and 0.6 percent respectively, but spending on home improvements fell back 0.6 percent.

Public spending improved in the month led by a 5.2 percent gain for educational building. Highway & street spending rose 1.1 percent in the month but the yearly decline is still steep at 7.4 percent. Both Federal and state & local spending rose in the month but are down in the low single-digits on the year.

This is a mixed report for what has proven to be an uneven year for the construction and housing sectors.

Recent History Of This Indicator:
Construction spending, mixed all year, rose a solid 0.5 percent in August in a report, however, that also included sharp downward revisions to July. Forecasters see construction spending posting no change in September. Residential spending, led by single-family homes, has been strong this year, in contrast to non-residential spending which is being held down by weakness in highways & streets and public building.