U.S. construction spending grows sequentially in September

Construction spending in the U.S. grew sequentially in September. Construction spending rose 0.3 percent, as compared with consensus expectations of a decline of 0.2 percent. Part of the miss relative to the forecast came from downward revisions to August data, with the report now showing a 0.1 percent rise in total construction spending.

The rebound in September was mainly due to public construction spending, which in turn was driven by the residential category. Public residential spending, which is usually volatile, recovered after three straight months of negative growth. Public non-residential spending also rose strongly by 2.5 percent sequentially. Meanwhile, private construction spending dropped 0.4 percent sequentially, dragged down by a decline in the non-residential category. Private residential spending was flat on the month, as modest rises in both single and multi-family construction spending aided in countering the decline in home improvements.

The construction spending report released was stronger than anticipated and pushed the third quarter GDP tracker a tenth-higher relative to the BEA’s advance GDP estimate to 3.1 percent, stated Barclays in a research report.

“Data on private construction spending were a touch weaker than what we had penciled in, implying slightly lower residential and structures investment in Q3, and partly offset the boost to our tracker from the public spending sub-component”, added Barclays.

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