US construction spending rises in August on homebuilding
US CONSTRUCTION spending increased in August, lifted by outlays on single- and multi-family housing, though mortgage rates at nearly 23-year highs could slow momentum.
The Commerce Department said on Monday (Oct 2) that construction spending rose 0.5 per cent. Data for July was revised higher to show construction spending advancing 0.9 per cent instead of 0.7 per cent as previously reported. The increase in spending in August was in line with economists’ expectations.
Construction spending jumped 7.4 per cent on a year-on-year basis in August. Spending on private construction projects rose 0.5 per cent, with investment in residential construction rising 0.6 per cent after increasing 1.6 per cent in the prior month. Private construction spending gained 1.2 per cent in July.
A dearth of homes available for sale is fueling new construction, but higher mortgage rates pose a challenge. The rate on the popular 30-year fixed mortgage averaged 7.31 per cent last week, the highest since December 2000, from 7.19 per cent the prior week, according to data from mortgage finance agency Freddie Mac.
The construction spending report showed outlays on multi-family housing projects rose 0.6 per cent in August. There is limited room for further gains as the stock of multi-family housing under construction is near record highs. Spending on new single-family construction projects rose 1.7 per cent.
Spending on private non-residential structures like factories climbed 0.3 per cent in August. Spending on manufacturing construction projects shot up 1.2 per cent. Efforts by the Biden administration to bring semiconductor manufacturing back to the US are boosting factory construction.
Spending on public construction projects rebounded 0.6 per cent after dipping 0.1 per cent in July. State and local government spending was unchanged while outlays on federal government projects soared 7.8 per cent. REUTERS
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