Construction Spending Declines Third Consecutive Month

Construction spending has rolled over, led by residential.

Econoday economists expected a 0.3% rise this month (why, I have no idea given the state of housing). Instead, total spending fell 0.1% in October from September that was revised 0.1% lower.

This marks the third consecutive decline and fourth in five months.

Key Points

• Spending on new single-family homes in October fell 0.5 percent with home-improvement spending down 0.9 percent, both offsetting a strong 1.0 percent rise in multi-family homes.
• Private nonresidential construction fell 0.3 percent in October with declines in power, manufacturing, transportation and commercial components offsetting another strong gain for office building.
• Public building has been a strength for the construction sector as it was again in October. Educational building rose 2.6 percent in the month though highway & street spending did edge 0.1 percent lower.
• Total residential spending is up only 1.8 percent year-on-year with single-family up 2.4 percent, home improvements up only 0.4 percent, and multi-family up 3.2 percent. The softness on the residential side is limiting overall construction spending to a 4.9 percent yearly gain.
• Year-over-year, education is up 9.2 percent and highway & streets up 5.2 percent.

In addition to housing, private construction spending looks to have topped.

Get ready for makeshift government projects.

Mike “Mish” Shedlock