The U.S. Census Bureau of the Department of Commerce announced that construction spending during October 2015 was estimated at a seasonally adjusted annual rate of $1,107.4 billion, 1.0 percent (±1.8 percent) above the revised September estimate of $1,096.6 billion. The October figure is 13.0 percent (±2.5 percent) above the October 2014 estimate of $979.6 billion.
During the first 10 months of this year, construction spending amounted to $888.1 billion, 10.7 percent (±1.3 percent) above the $802.3 billion for the same period in 2014.
In October, the estimated seasonally adjusted annual rate of public construction spending was $304.9 billion, 1.4 percent (±3.0 percent) above the revised September estimate of $300.8 billion. Educational construction was at a seasonally adjusted annual rate of $69.2 billion, nearly the same as (±2.8 percent) the revised September estimate of $69.2 billion.
Highway construction was at a seasonally adjusted annual rate of $94.1 billion, 1.1 percent (±7.1 percent) above the revised September estimate of $93.1 billion.
Spending on private construction was at a seasonally adjusted annual rate of $802.4 billion, 0.8 percent (±1.0 percent) above the revised September estimate of $795.8 billion.
- Residential construction was at a seasonally adjusted annual rate of $399.0 billion in October, 1.0 percent (±1.3 percent) above the revised September estimate of $395.0 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $403.4 billion in October, 0.6 percent (±1.0 percent) above the revised September estimate of $400.8 billion.
According to Patrick Newport, U.S. Economist for IHS Global Insight, “Single-family and multifamily construction, making steady monthly gains, are on a positive trajectory heading into 2016. Spending on multifamily structures is back to normal. Spending on new single-family residential structures remains depressed by historical standards. What matters for the economy though, is that it is improving and thus adding to economic growth.”
IHS Global Insight expects that residential investment will contribute 0.27 percentage points to real GDP growth in 2015, after adding .05 percent in 2014.
“Non-residential construction, which grew at a spectacular 42.8 percent annual rate in the second quarter as spending on manufacturing plants soared, slowed to 3.0 percent in the third,” Newport said. “Spending remains steady almost across the board with 7 of 11 categories, up more than 10 percent from year-ago levels. A key category to watch is manufacturing construction, which is at elevated levels (mostly because of spending on chemical plants) – and is set to land hard, if not crash, sometime in 2016.
“Public construction also caught fire in the second quarter, increasing at a 30.8 percent annual rate – and, like its private nonresidential counterpart, slowed sharply in the third to an 8.8 percent rate,” Newport continued. “For October, spending was up 1.4 percent month-on-month and 6.1 percent year-on-year – solid – and a good omen for 2016.
“Core construction spending grew at a record-setting 28 percent annual rate in the second quarter (data started in 1993), contributing 1.4 percentage points to second quarter GDP growth,” Newport concluded. “Its third quarter contribution was 0.4 percent, solid but far from spectacular. For 2016, outside of manufacturing construction, we are expecting solid broad-based growth”