Washington, DC, Dec. 2--Construction spending edged up 0.3% in October with the strength centered in a big gain in construction of schools, hospitals and other commercial buildings.
According to the Commerce Department, spending on building projects around the nation rose to a seasonally adjusted annual rate of $834.6 billion in October.
The October increase, which was slightly better than had been expected, matched the 0.3% gain in September. Both months showed increases following a large 1% drop in August.
Meanwhile, manufacturing activity posted a slight rise in November, but remained below the level that is normally viewed as sign of growth. The Institute of Supply Management's index of business activity in manufacturing rose to 49.2 last month, a slight improvement from the 48.5 reading in October. However, analysts view any reading below 50 as a sign that the manufacturing sector is not growing. The last time the index was above 50 was in August.
The October gain in construction activity was led by a strong 1% rise in spending for non residential buildings, which rose to an annual rate of $158.3 billion for the month. The increase followed a 2% drop in non residential activity in September.
Growth in October was led by a 10% jump in spending on educational buildings, followed by a gain of 2.2% in spending on hospital construction.
Spending for construction of homes and apartments was up slightly to $412.3 billion in October, only a 0.1% rise from the September level of $412.1 billion.
Residential construction has been one of the leading bright spots in the uncertain economic recovery as the lowest mortgages rates in a generation have spurred record home sales. Residential construction was up 0.7% in September.
Government spending, which has also been strong for most of the year, dropped by 0.3% in October to an annual rate of $205.4 billion, following a 1.6% surge in September. The weakness was led by 3.8% decline highway construction, one of the biggest categories in the government sector.
The 0.3% increase pushed overall construction activity to an annual rate of $834.6 billion, compared to an annual rate of building of $832.5 billion in September.
