US construction spending surged 1.4% in October, the best gain in five months, with all major categories of building posting gains. The October spending increase was the third monthly gain after more modest advances of 0.3% in September and 0.5% in August, the commerce department said Friday.
Home building was up 0.4%, with strength in single-family construction offsetting a drop in apartment building. Non-residential construction rose 0.9% after four straight declines. Spending on government projects jumped 3.9%, the biggest one-month gain in three years, with spending at the federal and state and local levels all showing increases, AP reported.
Though home building has been weak for much of the year, economists expect such construction to rebound as a strong job market boosts sales in coming months.
The overall economy grew at a healthy annual rate of 3.3% in the July-September quarter, the best showing in three years, even though residential construction declined for a second straight quarter. But economists remain optimistic that the low level of unemployment—4.1% in October—will spark a sustained rebound in sales and construction.
The strength in October was evident in all major sectors of construction. The rise in housing construction reflected a 0.3% gain in single-family homes, which offset a 1.6% drop in the smaller apartment category.
In the non-residential area, office building was up a strong 4.4%, and hotel construction rose 2.3%. Those gains offset a 1.9% fall in the category that covers shopping centers. In government categories, spending at the state and local level rose 3.3%, while spending on federal projects jumped 11.1%.
A measure of US factory activity fell more than expected in November as a gauge of employment cooled, but the index continued to point to strengthening manufacturing conditions, CNBC reported.
The Institute for Supply Management on Friday said its index of national factory activity slipped to a reading of 58.2 last month from 58.7 in October.
Even with the decline, the index pointed to growth ahead and was only marginally below a September reading that was the highest since May 2004. But the ISM’s employment index slipped unexpectedly to 59.7 from 59.8, which could point to less strength in manufacturing hiring this month than analysts had expected.
“The ISM reading is consistent with robust growth in output, exports, capital spending and employment,” said Ian Shepherdson, an economist at Pantheon Macroeconomics.
US Treasuries yields edged down from session highs after the data, while the dollar and stocks were trading slightly higher.
