U.S. construction spending rises sequentially in November

Construction spending in the U.S. grew sequentially in November. Spending was up 0.8 percent, coming in line with the projections. Also, October data were downwardly revised, with the overall construction spending now up 0.9 percent sequentially, as compared with the earlier estimate of 1.4 percent, while September data was revised up slightly. Overall, the construction spending has recorded fairly strong growth in the initial two months of the fourth quarter of 2017 and implies a solid end to 2017.

The November construction growth was driven by private construction spending, which grew 1 percent, which in turn was driven by an equal-sized rises in the residential and non-residential categories. Meanwhile, public construction spending grew below forecast, coming in at a modest 0.2 percent sequentially driven mainly by the residential category.

The construction spending report for the month of November was a bit above expectations, but some of this upside surprise was countered by downward revisions to the October data, noted Barclays in a research report. Within the details of the tracking model, weaker-than-expected public construction spending implies a lower contribution from government spending to the fourth quarter GDP.

“On the other hand, data on private construction spending were stronger than we had penciled in, implying higher residential investment in Q4, and offset the drag to our tracker from the public spending and structures subcomponents”, added Barclays.

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