Construction Spending Rises in October


Nonresidential Strengthens as Residential Continues to Cool

Total construction spending rose 0.2% during October. Overall construction outlays are now up 8.6% over the past year. One of the major themes over the past year and a half has been the divergence in residential and nonresidential activity owed largely to the aftershocks of the pandemic. Now, with vaccines and an expanding toolbox of therapeutics, the post-pandemic economic picture is coming into clearer view and the gap appears to be narrowing. Residential spending, which slipped 0.5% during the month, has moderated recently. Despite strong buyer demand and dwindling inventories of existing homes, persistent shortage of materials and labor as well as substantially higher input costs have forced builders to tap the breaks on new development. On the other side of the ledger, nonresidential outlays rose 0.9% in October, the fourth straight month spending has either been flat or improved. The nonresidential sectors suffering the most acute impacts from the pandemic are still struggling to get back on track, notably for new office, hotel, education and healthcare projects. That said, the knock-on effects of the pandemic continue to be a boon for new warehouse development. Demand for retail space has also improved, as consumers have more time to shop given more flexible work schedules. Manufacturing outlays have also firmed, as many producers are looking to boost capacity. READ FULL ARTICLE>>