Construction spending in residential projects has unexpectedly rose for the month of October, the biggest gain for the last six months. The Commerce Department reported the figures on Wednesday, December 1, 2010, and its shows the 0.7 percent increase in construction spending have matched the prior month’s gain.
After four consecutive months of decline, spending on September climbed to 0.6 percent.
The increase has bought the U.S construction spending to $802.3 billion, which is unlike the Bloomberg’s economist had projected of a median estimate 0.3 percent drop.
For the non-residential construction spending, there are still ongoing projects from the federal stimulus effort, which are quite helpful, especially from the federal funds on bridge and new roads projects.
The 0.7 percent increase comes as a surprise to several economists, who are expecting a decline.
Majority of the increase came from private residential construction which rose 2.5 percent that leads to $229.6 billion seasonally adjusted annual rate.
Home improvements construction spending also climbed 6.2 percent that offsets the decline on single-family construction, which is 1.2 percent.
But according to The Associated General Contractors of America’s chief economist, Kenneth Simonson said not to overstate the report on the strength of the residential spending because of the offset.
Spending on commercial projects dropped in October—about 0.7 percent and of $252.2 billion seasonally adjusted annual rate, because the recession cut the demand on non-residential projects like hotels, office buildings, and shopping centers, as well as the fall in factory construction.
In the last 12 months, about 9.3 percent has decreased in construction spending but it has ended in October.