WASHINGTON (Reuters) - U.S. construction spending was unchanged at a record high in September as continued gains in private construction projects was offset by the biggest drop in public outlays in a year.
The Commerce Department said on Thursday that the flat reading in construction spending followed an upwardly revised 0.8 percent jump in August. Construction spending in August was previously reported to have gained 0.1 percent.
Economists polled by Reuters had forecast construction spending nudging up 0.1 percent in September. Construction spending increased 7.2 percent on a year-on-year basis.
The upward revision to August data could have an impact on the government’s third-quarter gross domestic product estimate published last Friday. The government estimated the economy grew at a 3.5 percent annualized rate in the July-September period.
In September, spending on private construction projects increased 0.3 percent to a record high after rising 0.4 percent in August. Private construction spending was boosted by increases in both residential and nonresidential outlays.
Investment in private residential projects rebounded 0.6 percent after declining 0.4 percent in August. September’s increase came despite weakness in homebuilding amid rising mortgage rates, expensive raw materials as well as land and labor shortages.
Residential investment contracted in the first nine months of this year, and is one of the risks to the economic expansion that is in its ninth year, the second longest on record.
Spending on private nonresidential structures, which includes manufacturing and power plants, edged up 0.1 percent in September to an all-time high after surging 1.4 percent in August.
Spending on public construction projects fell 0.9 percent in September, the largest drop since August 2017, after vaulting 2.2 percent in August. Spending on federal government construction projects tumbled 6.8 percent, the most since June 2017, after soaring 5.3 percent in August.
Investment in state and local government construction projects fell 0.5 percent in September after leaping 2.0 percent in August.
Reporting By Lucia Mutikani; Editing by Andrea Ricci