Construction Spending Picks Up

Construction spending is picking up, at plus 0.7 percent in August for a year-on-year gain of 13.7 percent. Construction of single-family homes rose a solid 0.7 percent in the month with continuing gains certain given strength in permits. Multi-family construction, driven by rising rents, jumped 4.8 percent in the month and is up 25 percent year-on-year. The year-on-year gain for single-family homes is lagging but is still very strong at 14.0 percent.

Gains were also posted in private non-residential construction, at 0.2 percent following July's 1.6 percent jump, with gains continuing to be centered in manufacturing in strength that belies other indications of weakness in business investment. Year-on-year, non-residential construction is up 17 percent. Public construction remains subdued with year-on-year gains in related components in the mid-single digits.

For the economy, strength in construction, including strength in new homes, looks to offset not only unevenness in existing home sales but also what appears to be an ongoing breakdown in the factory sector.

Recent History Of This Indicator:
Construction spending in July was very strong and is expected to rise further in August, at a consensus 0.7 percent. July's strength was broad based, including gains for single-family homes and nonresidential construction as well. Housing and construction have been on a moderate rise, but still good enough to contribute to overall economic growth.