US construction spending increased 0.9% in August, the Census Bureau reported Thursday, October 1, after July's decline was revised to 0.1% from the previously reported 0.5%. Economists surveyed by Reuters had expected no change in August. Despite the monthly rebound, spending was 1.7% lower than a year earlier.
Private construction spending rose 1.1%. Within that category, private nonresidential spending increased 1.0%, including a 4.6% rise in office projects and a 0.9% increase in power-plant construction. Residential spending also rose 1.1%, but the increase was not uniform: single-family outlays edged up 0.2% for the month and remained 3.5% below their year-earlier level. Public construction spending rose 0.2%.
These estimates track the value of construction work put in place, not just new project starts, and monthly figures can be revised. The rise therefore does not by itself show that housing demand has turned around. The year-over-year decline and weak single-family comparison offer a more cautious backdrop.
Reader question: Does the August increase mean homebuilding is recovering? Not necessarily. Spending rose overall, but single-family spending was only slightly higher for the month and remained below its level a year earlier.