Construction spending, driven by renewed investment in housing, rose in October for the third straight month, exceeding analysts’ projections and increasing by 0.8 percent, according to a Business Week article by Alex Kowalski.
Riding on low interest rates, a strong trend in home improvement projects, and a newfound demand for apartment complexes and multifamily units, private construction spending increased by 2.3 percent in October, with homebuilding outlays rising 3.4 percent and home improvement up by 6.7 percent.
Additionally, housing starts were up nearly 17 percent from October 2010, building permits increased by 11 percent from September to October, and even homebuilder confidence showed signs of growth in the latest National Association of Home Builders/Wells Fargo sentiment index.
Aneta Markowska, a senior U.S. economist at Societe Generale in New York, said in Kowalski’s article that she foresees continued growth in construction.
“Construction will contribute positively to growth,” Markowska said. “The problem is that (home) construction right now is 2 percent of gross domestic product, so even if you get big percent increases year-on-year, the impact would be marginal.”
Two areas where spending decreased, though, were public construction, which fell by 1.8 percent, and federal construction outlays, which were down 5 percent to $26.4 billion, the lowest level in more than two-and-a-half year, Kowalski noted. And with austerity measures being considered at both the national and local level, public spending may decrease further in the coming months.
Update: From HousingWire: “Residential construction spending rose 3.2% from a month ago to a seasonally adjusted annual rate of $247.3 billion, the U.S. Census Bureau said Thursday. That annual rate is also up 0.6% from residential spending levels a year ago.”