- The Washington Times - Friday, January 3, 2003

WASHINGTON, Jan. 3 (UPI) — The Commerce Department reported Friday that total construction spending rose for the third consecutive month during November, improving 0.3 percent to a seasonally adjusted annual rate of $843.2 billion.

Economists on Wall Street were expecting construction spending, which accounts for almost 5 percent of the nation's economy, to rise 0.2 percent during the month after rising a revised 1 percent in October, which was originally reported as improving 0.3 percent.

Construction spending is the dollar value of new construction activity on residential, nonresidential, and public projects. Investors watch the report since it has a direct bearing on stocks, bonds and commodities.

In a more specific sense, trends in the construction data carry valuable clues for the stocks of home builders and large-scale construction contractors. Commodity prices such as lumber are also very sensitive to housing industry trends.

Analysts noted businesses only put money into the construction of new factories or offices when they are confident that demand is strong enough to justify expansion. The same goes for individuals making the investment in a home. That's why construction spending is a good indicator of the economy's momentum.

The latest report showed construction spending on new houses jumped 1.6 percent in November to a record $271.3 billion. Home-improvement spending slipped 0.5 percent after rising 2.4 percent a month earlier.

Spending on multifamily dwellings, such as apartments, rose 0.5 percent to $32.1 billion after falling 3 percent in October.

Nonresidential construction slipped 0.1 percent to $158.7 billion after jumping 1.5 percent a month earlier.

The report also showed public construction spending rose 1.5 percent to $207.9 billion.

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