Wells Fargo Reports: Construction Spending Bounces Back in October

Following a surge in the third quarter in private nonresidential construction, the pace of spending slowed to start Q4. Spending on residential construction showed some signs of strengthening in the fourth quarter.

Public Construction Picks Up

• Total construction spending rose 0.5 percent to begin the fourth quarter with residential investment rising 1.8 percent, while nonresidential construction declined 0.3 percent for the month.
• Private construction spending contracted for the second straight month, while public construction activity rose 2.8 percent with additional upward revisions to prior months’ data.

Better Residential Investment in Q4

• Private residential construction rose 1.6 percent with single and multifamily both posting 2.8 percent increases, while home improvement fell 0.6 percent for the month. The bounce back in private residential supports our view for a rebound in residential investment in Q4.
• A rise in both federal and state & local construction are supportive of greater government investment in Q4.