WASHINGTON (AP) — U.S. developers boosted construction spending in October at the fastest pace in more than four years, propelled by a surge in government projects. But spending on home construction and commercial projects both fell.
Overall construction spending increased 0.8 percent in October to a seasonally adjusted annual rate of $908.4 billion, the Labor Department said Monday. That's up from September, when spending fell 0.3 percent.
The October pace was the best since May 2009 and was driven by a 3.9 percent surge in public spending. Federal spending increased 10.9 percent, suggesting the 16-day partial government shutdown had little impact on public projects.
Spending on state and local government construction also rose.
One troubling sign: Home construction fell 0.6 percent in October from September, dragged lower by a drop in single-family homes.
But spending on home construction has surged 17.8 percent in the past 12 months, the fastest year-over-year pace since the peak of the 2008 financial crisis. And a recent jump in permits to build apartments indicates that will continue.
Deutsche Bank chief U.S. economist Joseph Lavorgna said that spending on single-family houses should rebound given plans by homebuilders to ramp up construction.
"The recent dip should reverse course given the ongoing improvement in permits for new construction," Lavorgna said in a client note.
Nonresidential spending fell 0.5 percent in October from September, lowered by declines in the building of private power plants, communication facilities and amusement parks and recreation centers. Construction of office buildings, hotels and private schools all increased.
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