Construction Spending Up Sharply

It's not housing that drove construction spending up a very sharp 1.4 percent in October but non-residential activity which had been lagging in this report. Spending on private non-residential construction jumped 0.9 percent in the month with strength centered in office construction and transportation construction. Despite the improvement, year-on-year spending on the non-residential side is still negative, at minus 1.3 percent. Public building also had a strong month with educational building up 10.9 percent for a standout year-on-year rate of 14.6 percent. Spending on highways & streets was also strong in October, up 1.1 percent though still down on the year, at minus 8.5 percent.

Residential spending has been leading this report but October was moderate, up 0.4 percent overall and held back by a 1.6 percent decline for multi-units. But home improvements were strong in the month, up 1.4 percent for an 8.7 percent yearly rate. Total residential spending is up a year-on-year 7.4 percent with spending on new single-family homes up a very significant 8.9 percent.

But new homes aside, overall construction spending is up only 2.9 percent which is a very moderate total that evokes this week's Beige Book where modest-to-moderate still dominated the description of the economy.

Recent History Of This Indicator
Construction spending has been mixed all year rising 0.3 percent in September with October's consensus increase at 0.5 percent. Nonresidential construction has been the weak link but not residential construction which, with strength centered in single-family homes, has been rising at a nearly double-digit pace.