Construction Spending Shows Strong Rise And Broad Strength

Construction spending rose a strong 0.8 percent and showed broad strength in November. Spending on residential construction rose 1.0 percent led by a very welcome 1.9 percent rise for single-family homes where inventories in the sales market have been thin. Home improvements also show strength, up 0.7 percent in the month. Private nonresidential spending rose 0.9 percent and was led by office construction which jumped 5.5 percent in the month. Spending on public construction was mixed with the educational category up 3.8 percent but highways and streets down 0.8 percent.

Year-on-year rates highlight the strength of single-family construction, up 8.9 percent to more than offset a 1.7 percent decline in multi-family units. Home improvements show a very strong 9.8 percent year-on-year increase. The strength on the residential side contrasts with year-on-year weakness in private nonresidential spending which is in the negative column at minus 3.1 percent. Educational building was up a yearly 12.0 percent in November offset by highways and streets which were down 6.3 percent. Federal construction spending posted a modest 1.7 percent year-on-year rise with state and local spending up 1.8 percent.

The residential side of this report joins a tide of rising tide of favorable data on the housing sector which, like manufacturing, appears to have accelerated into year end which will be a positive for fourth-quarter GDP and points to momentum for first-quarter GDP.

Recent History Of This Indicator:
Rebounds in private nonresidential as well as public building were the highlights of October's 1.4 percent jump in construction spending. Residential spending, which had been leading this report, has been mixed recently. Forecasters are calling for only limited give back for November's headline where the consensus gain is a solid 0.6 percent.