Construction spending trended sideways in September and October
Summary
Construction spending declined modestly in September and then rebounded in October, making overall construction spending virtually unchanged since August. Some segments continued to outperform over the two-month period, such as data centers, power, transportation and public works projects. That said, most other categories fell back, demonstrating that high interest rates and economic uncertainty are still constraining activity. All told, the declines registered in private outlays support our outlook for continued near-term weakness in residential and structures investment.
High interest rates limiting private outlays
- Total construction spending declined 0.6% in September and then rose 0.5% in October. Although down 1.0% on a year-ago basis, the trend in spending was essentially flat since August, with outlays down 0.1% over the two-month period.
- In October, private construction spending fell 1.9% on a year-to-year basis, with residential and nonresidential outlays both dropping on an annual basis and over the balance of the previous two months. The declines registered in private outlays support our outlook for continued near-term weakness in residential and structures investment.
- Public outlays have fared better, rising 2.1% year-to-year and 0.5% over the course of September and October. Recent public sector gains have been uneven, with educational, sewage & waste and water supply accounting for much of the growth since August.
Author
Wells Fargo Research Team
Wells Fargo
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