Construction spending improves in October
According to the U.S. Census Bureau of the Department of Commerce, construction spending rose slightly (0.8 percent) in October to $908.4 billion, compared to $901.2 in September. Spending has risen 5.3 percent since October 2012, a small, but important improvement.
The Census Bureau reports that during the first 10 months of 2013, construction spending combined is 5.0 percent above the same period in 2012. It is important to note that today’s announcement was for both October as well as September, with spending falling in September and rising in October since the last report made (in August).
Private versus public construction spending
Private construction spending fell 0.5 percent from September, with residential construction spending down 0.6 percent and nonresidential private construction spending down 0.5 percent below September. A good sign for housing, private residential construction spending is increasing at a steady rate and regaining grown to become the largest spending category once again.
Meanwhile, public construction spending rose 3.9 percent, with the largest jump seen in education construction (up 8.5 percent for the month), and while up for the month, public spending has dropped to 2006 levels, which is positive for the economy as the government crutches are being used less.
Will construction spending continue improving?
Bill McBride at CalculatedRiskBlog said, “There has been a “pause” in residential construction spending, but the level is still very low and I expect residential spending to continue to increase. Private residential spending is 52% below the peak in early 2006, and up 43% from the post-bubble low.”
McBride added, “Looking forward, construction spending should continue to increase. Residential spending is still very low, non-residential should start to pickup, and public spending appears to have bottomed.”