Construction spending for November set record highs for the fifth straight month, according to information released by the Commerce Department Monday.
Construction spending rose 1.2 percent in November from October, to an adjusted annual rate of $934 billion. Many economists point to the lowest interest rates in 40 years as the reason for the fast increase in construction.
Both private and public construction did well, with private construction rising 1.2 percent to an adjusted annual rate of $710.8 billion and total public construction increasing 1 percent to $223.7 billion. According to Ken Simonson, chief economist for the Associated General Contractors, the increase is drastic compared to November 2002 rates.
“Private residential construction just keeps getting stronger. It jumped 14 percent from November 2002 and the year-to-date total is almost 10 percent higher than last year’s record,” Simonson said. “Meanwhile, public construction climbed nearly 5 percent from November 2002 and gained 3 percent in the first 11 months.”
According to Simonson, residential construction gave strength to the private sector, with a 2 percent rise from October. Home building is expected to remain strong until mid-2004 because it is likely the Federal Reserve will keep interest rates low to ensure the economy will remain stable.
Public construction also experienced growth in November, specifically in office and retail construction. Office construction showed a solid rise of 2.5 percent in November, and the construction of “big box” and discount stores jumped 23 percent from November 2002.
Government construction showed a 1.1 percent rise in spending by state and local governments, to a record annual rate of $205.7 billion. Federal spending had a rate of $17.95 billion, which was the highest since July. Construction of schools actually dropped in November, but is still 1 percent higher than the year-to-date percentage.