U.S. construction spending rises solidly to near eight-year high

U.S. construction spending rises solidly to near eight-year high

© Mike Segar / Reuters

Construction spending increased 1.0 percent to a seasonally adjusted $1.11 trillion rate, the highest level since December 2007, after an unrevised 0.6 percent gain in September, the Commerce Department said on Tuesday.

Construction spending has risen every month this year and is likely to support the economy in the final three months of the year as it deals with the headwinds of a strong dollar and spending cuts by energy firms, which have undermined manufacturing. Frugal consumers are also holding back growth.

Economists polled by Reuters had forecast construction spending rising only 0.5 percent in October. Construction outlays were up 13 percent compared to October of last year.

Construction spending in October was buoyed by a 0.8 percent rise in private spending, which touched its highest level since

January 2008. Outlays on private residential construction gained 1.0 percent and hit their highest level since December 2007,

reflecting increases in home building and renovations.

Investment in private non-residential construction projects rose 0.6 percent to a near seven-year high, with spending on manufacturing plants rising a solid 3 percent.

Public construction outlays jumped 1.4 percent to a five-year high as a surge in federal government spending offset a dip in investment by state and local government.

Spending on state and local government construction projects, which is the largest portion of the public sector segment, slipped 0.1 percent. Federal government outlays surged 19.2 percent to the highest level since May 2012.

((Reporting by Lucia Mutikani; Editing by Andrea Ricci); ((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters; Messaging: lucia.mutikani.thomsonreuters.com@reuters.net)))