Small Improvement in Construction Spending in November

Construction spending unexpectedly rose +.1% MoM in November(consensus -.4%). In addition, the prior month was revised to only a-.4% MoM decline from the originally reported -.8% drop. Once again,all of the weakness was in residential spending which fell -2.4% MoM(-17.5% YoY), while non-residential spending rose +2.1% MoM (+18.1%YoY). Over the past year, construction spending has fallen -.1% YoY.
Private spending fell -.7% MoM (-4.8% YoY), while public spending rose+2.5% MoM (+16.2% YoY), the most in almost a year. Growth last monthwas focused on schools, power plants, and factories, as new homeconstruction fell to a five year low.
Public spending over the past year has been evenly distributed betweenresidential (+13% YoY) and non-residential (+16.3% YoY). In November,Federal spending grew 2.2% MoM while state and local spending rose2.2% MoM. But, over the past year, Federal spending (+1.7% YoY) haslagged substantially behind state and local spending (+17.4% YoY).
Construction growth is expected to remain under pressure, as thehomebuilding market remains weak, and tighter credit conditions slowdemand in other sectors as well