US construction spending rebounds strongly in October

US construction spending rose 1.3 percent in October, according to a US Department of Commerce report, with solid investment in private and public sector projects boosting figures.

Construction spending beat forecasts while September data was revised down to show construction outlays, declining by 0.5 percent instead of rising 0.3 percent as previously reported.

• Construction spending during October was estimated at a seasonally adjusted annual rate of £1072.4 billion, 1.3 percent (±1 percent) above the revised September estimate of £1,058.9 billion. 
• The October figure is 3.7 percent (±1.3 percent) above the October 2019 estimate of £1,033.8 billion. During the first ten months of this year, construction spending amounted to £886.8 billion, 4.3 percent (±1.0 percent) above the £850.2 billion for the same period in 2019.
• Spending on private construction was at a seasonally adjusted annual rate of £815.13 billion, 1.4 percent (±0.7 percent) above the revised September estimate of £804.10 billion. 
• Residential construction was at a seasonally adjusted annual rate of £474.8 billion in October, 2.9 percent (±1.3 percent) above the revised September estimate of £461.5 billion. 
• Non-residential construction was at a seasonally adjusted annual rate of £340.3 billion in October, 0.7 percent (±0.7 percent) below the revised September estimate of £342.8 billion.
• Estimated seasonally adjusted annual rate of public construction spending was £257 billion, 1 percent (±1.6 percent) above the revised September estimate of £254.5 billion.

According to economists polled by Reuters, construction spending was forecast to rise by 0.8 percent in October. However, construction spending increased by 3.7 percent on a year-on-year basis in October.

Spending on private construction projects increased by 1.4 percent, fuelled by investment in homebuilding amid record-low mortgage rates and a pandemic-driven migration to suburbs and low-density areas. Spending on residential projects shot up by 2.9 percent.

However, outlays on non-residential construction, such as on gas and oil well drilling, fell by 0.7 percent in October. The pandemic has severely impacted on oil prices, resulting in a contraction in spending on non-residential structures in the third quarter. The fourth straight quarterly decline in spending on non-residential structures bucked a rebound in overall business investment.