Commercial Sector Drives Construction Spending

Washington, DC, September 28, 2007—Construction spending rose 0.2% in August, driven by an increase of 2.3% in the non-residential sector, according to the Commerce Department. It was the 18th consecutive decline in the residential market.

Construction spending fell a revised 0.5% in July.

Total construction spending is down 1.7% compared to August 2006.

Spending on private residential projects fell 1.5% in August. Spending on housing is off 16.5% from a year earlier.

Private nonresidential construction spending rose 2.3% in August, for it biggest gain since February. Nonresidential outlays are up 15.2% in the past year.

Business investment in structures, which increased at an annual rate of 26% in the second quarter, has been a major contributor to economic growth over the past six quarters.

Spending on public-sector construction projects rose 0.7% in August and is up 14.7% compared with a year ago.

Within the private sector, spending on lodging grew 4.2%, bringing the year-over-year gain to 64.7%. Spending on offices rose 3.7%, while spending on commercial (retail) space increased 2.6%. Spending on manufacturing facilities increased 1%.

In the public sector, spending on schools increased 2.5%, and spending on highways and streets rose 0.8%.