U.S. construction spending growth accelerates strongly in October

Construction spending in the U.S. grew sequentially in the month of October. It accelerated significantly to 1.4 percent from the prior month’s rise of 0.3 percent, as compared with consensus expectation of 0.5 percent sequentially. Non-residential construction grew strongly, while residential construction spending was widely consistent with expectations.

Delving into details, the growth in October was mainly driven by a jump in nonresidential construction of 2.1 percent, while the overall residential construction rose a more moderate 0.4 percent. Within residential, private spending grew 0.4 percent sequentially while public spending dropped 3 percent correcting slightly from the solid rise in late summer. Meanwhile, nonresidential construction was stimulated by the public sector that rose 4 percent sequentially, while private sector spending rose a more modest 0.9 percent.

“The strong increase in public construction spending suggests a higher contribution from government spending to Q4 GDP, and boosted our tracker by about three-tenths”, noted Barclays in a research report.

Meanwhile, data on private construction spending suggested slightly lower residential and structures investment in the fourth quarter.

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