WASHINGTON – U.S. construction spending unexpectedly rebounded in September amid a surge in investment in nonresidential structures that offset a further decline in outlays on single-family homebuilding.
The Commerce Department said on Tuesday that construction spending rose 0.2% in September after declining 0.6% in August.
Economists polled by Reuters had forecast construction spending would decrease by 0.5%. Construction spending advanced 10.9% on a year-on-year basis in September.
Spending on private construction projects rose 0.4% after dropping 0.7% in August. But investment in residential construction was unchanged, with spending on single-family projects dropping 2.6%. Outlays on multi-family housing projects gained 0.3%.
The housing market has been the sector hardest hit by the Federal Reserve’s aggressive interest rate hikes. The U.S. central bank is tightening monetary policy to dampen overall demand in the economy.
The 30-year fixed mortgage rate averaged 7.08% last week, breaking above 7.0% for the first time since April 2002, according to data from mortgage finance agency Freddie Mac.
Residential investment dropped for a sixth straight quarter in the third quarter, the longest such stretch since the housing market collapse in 2006, the government reported last week.
In September, spending on private non-residential structures like gas and oil well drilling jumped 1.0%. Outlays on non-residential structures have declined for six straight quarters.
Spending on public construction projects slipped 0.4% in September after a similar drop in August. Investment in state and local government construction projects increased by 0.6%, while federal government construction spending plunged by 12.7%.
Reporting by Lucia Mutikani; Editing by Paul Simao