Construction Spending Climbs for the 8th Straight Month

Construction spending in the United States rose in August, as both the private sector and government expenditures climbed higher.

Spending on construction projects rose 0.5 percent in August to a seasonally adjusted annual rate of $1.98 trillion, the Commerce Department said Monday.

That matched Wall Street’s expectation for a 0.5 percent increase. The prior month, however, was revised to show a 0.9 percent increase from the preliminary estimate of 0.7, so the spending figure for August actually exceeded expectations.

This is the eighth consecutive month of rising construction spending in the U.S., an indication that higher interest rates are not exerting all that much pressure on a sector of the economy thought to be particularly sensitive to monetary policy. Compared with a year ago, spending is up 7.4 percent, far outpacing inflation.

Residential construction spending rose 0.6 percent compared with the prior month. Private sector residential construction, which makes up most of the spending on building homes in the U.S., rose 0.6 percent. This was the fourth consecutive monthly increase in residential construction. Government spending on housing, a tiny fraction—around one percent—of overall residential construction, fell 1.1 percent.

Compared with a year ago, residential construction is down three percent. Private sector residential construction is down 3.1 percent and government spending is up 3.8 percent.

Private sector spending on new single-family houses rose 1.7 percent. Compared with a year ago, this is down 10.6 percent. This comprises around 45 percent of residential construction.

Private sector spending on apartments and condos rose 0.6 percent. Compared with a year ago, this is up 24 percent. This comprises around 15 percent of residential construction spending.

The balance of private sector residential construction is home improvement. The figures indicate a small decline in home improvement spending during the month of August.

Total government spending on construction rose 0.6 percent and is up 14.1 percent from a year ago. Spending on highways and streets, the largest category of government construction spending, rose 0.4 percent and is up 12.9 percent from a year earlier.