With a jump in spending on private construction more than offsetting a modest drop in spending on public construction, the Commerce Department released a report on Monday showing a continued increase in U.S. construction spending in the month of November.
The report said construction spending climbed by 0.9 percent to an annual rate of $1.459 trillion in November after surging up by 1.6 percent to a revised rate of $1.447 trillion in October.
Economists had expected construction spending to increase by 1.0 percent compared to the 1.3 percent jump originally reported for the previous month.
The continued increase in construction spending came as spending on private construction shot up by 1.2 percent to an annual rate of $1.112 trillion.
Spending on residential construction spiked by 2.7 percent to a rate of $658.1 billion, more than offsetting a 0.8 percent drop in spending on non-residential construction to a rate of $453.8 billion.
“Strong residential activity has driven construction past pre-pandemic levels, but non-residential outlays remain nearly 6% below their early 2020 pace,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.
She added, “We expect this divergence in construction spending to narrow a bit as we move through 2020 as some recovery in non-residential outlays is expected to take hold, particularly in private spending.”
Meanwhile, the Commerce Department said spending on public construction edged down by 0.2 percent to an annual rate of $347.6 billion.
The drop in spending on public construction came even though spending on educational construction rose by 0.3 percent to a rate of $86.7 billion and spending on highway construction jumped by 1.8 percent to a rate of $97.5 billion.
“Public outlays will likely continue to be constrained by tight state and local budgets despite a better than expected performance for revenues during the pandemic,” said Vanden Houten.