Construction Spending Rises in September
Growth Mainly Due to Rise in Public Projects

By: Brian Gallagher - Tuesday, November 2, 2010

According to the U. S. Commerce Department, U.S. construction spending rose unexpectedly in September 2010. The growth is attributed to  investment in public projects. 

Construction spending increased 0.5 percent to an annual rate of $801.7 billion according to the Department's monthly report. However, the Department also revised down August's construction spending to show a 0.2 percent decline instead of the previously reported 0.4 percent gain.

According to Associated Builders and Contractor's Chief Economist Anirban Basu, future spending is expected to be flat. "Looking at the bigger picture, today’s data suggests that overall nonresidential construction spending is poised to remain quite flat in the months ahead."

Spending on public projects increased 1.3 percent in September to $319.7 billion, the highest level since July 2009, after rising 2.2 percent in August. State and local government spending on construction projects increased 0.8 percent in September after rising 2.3 percent the prior month.

Private construction activity was flat after dropping 1.6 percent in August. Spending on private home building increased 1.8 percent in September after falling 4.2 percent the prior month. Private nonresidential spending declined 1.6 percent in September after rising 0.8 percent the previous month.

“Still, there was some positive movement. Construction spending on office space rose in September, perhaps because the lending environment is thawing a bit and new owners of buildings are seeking to re-tenant their purchases and to put their imprint on their properties,” said Basu.

“Construction related to education was also up, a good sign since the fear has been that education-related spending would continue to fall in the wake of still distressed state and local government budgets,” Basu said.


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