Construction Spending Up 0.3 Pct.
WASHINGTON (AP) _ Construction spending rose 0.3 percent in October, largely reflecting a sharp increase in big government projects and a pickup in residential building.
The Commerce Department reported today that spending rose to a seasonally adjusted annual rate of $699.3 billion. That followed a revised 0.1 percent decline in total construction spending in September although the government had been expecting a 0.5 percent increase.
October’s performance was stronger than many analysts’ expectations. They were forecasting construction spending would fall by 0.1 percent.
Home building and other construction activity, driven by low mortgage rates, had been a key contributing factor to the strong economic growth in the early part of the year. But the pace of construction spending has shown signs of cooling as rising mortgage rates have put off prospective buyers.
The Federal Reserve has raised interest rates three times this year to slow the robust economy and keep inflation under control.
Many economists, citing concerns about possible problems that may arise from the Y2K computer changeover, expect Fed policy-makers to leave rates alone when they meet next on Dec. 21. However, given the strong continuing economic growth, many economists have raised their expectations that the Fed will boost rates again early next year.