US CONSTRUCTION spending increased more than expected in October amid strong gains in single-family homebuilding, but data for the prior month was revised lower.

The Commerce Department said on Friday (Dec 1) that construction spending rose 0.6 per cent. Data for September was revised down to show construction spending climbing 0.2 per cent instead of 0.4 per cent as previously reported. Economists polled by Reuters had forecast construction spending climbing 0.4 per cent.

Construction spending accelerated 10.7 per cent on a year-on-year basis in October.

Spending on private construction projects increased 0.7 per cent in October. Investment in residential construction shot up 1.2 per cent.

Spending on new single-family construction projects surged 1.1 per cent. Strong new single-family homebuilding helped to end nine straight quarters of decline in residential investment in the third quarter.

New construction is being driven by a dEarth of previously owned homes on the market, but mortgage rates above 7 per cent are a challenge for both builders and prospective home buyers.

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Outlays on multi-family housing projects fell 0.2 per cent in October. There is a large stock of multi-family housing under construction and the rental vacancy rate jumped to its highest level in 2½ years in the third quarter, limiting growth in this housing segment.

Outlays on private non-residential structures like factories edged up 0.1 per cent. Spending on manufacturing construction projects rose 0.9 per cent, still supported by the Biden administration efforts to bring semiconductor manufacturing back to the US.

Spending on public construction projects increased 0.2 per cent. State and local government spending ticked up 0.1 per cent while outlays on federal government projects increased 2.2 per cent. REUTERS