Construction Spending Weakens in September

Spending on construction projects fell across the United States for a second straight month in September, spurring a decline in analysts' expectations for economic growth in Q3.

The Commerce Department reported Monday that construction spending throughout September came in at an estimated seasonally adjusted annual rate of $950.9 billion, down 0.4 percent from August but up 2.9 percent from a year ago.

Year-to-date through September, the government estimates total construction outlays came to $710.1 billion, an increase of 6.1 percent over the same period last year.

In a note to clients, Patrick Newport and Stephanie Karol, U.S. economists at IHS, called September's release "another disappointing report—and after adjusting for inflation, this report looks even more dismal."

"We expect that third-quarter real GDP will be revised down to 3.4 percent [from an original estimate of 3.5 percent] based on this report," they continued.

Among the good news in Monday's report was a 0.4 percent bump in spending on residential projects, which totaled an adjusted annual rate of $354.8 billion.

A small portion of that increase came from private homebuilding outlays. According to the Commerce Department, private residential construction building was at a rate of $349.1 billion in September, up 0.4 percent month-over-month. Spending on single-family housing climbed 1.1 percent to $192.5 billion, while spending for multifamily projects fell 1 percent to $43.3 billion.

Across all categories, spending on private, nonresidential projects was down 0.6 percent for the month to a rate of just less than $331 billion.

In the public sector, the government estimates spending on home construction was up 4.7 percent from August at a rate of $5.8 billion.