Construction spending logs biggest gain in 5 months

Bryan Mitchell | Bloomberg | Getty Images

A SkyTrak telehandler holds building materials aloft at a residential housing construction site on Scotten Avenue in Southwest Detroit, Tuesday, Nov. 18, 2014.

September's construction outlays were revised up to show only a 0.1 percent drop instead of the previously reported 0.4 percent fall. Economists polled by Reuters had forecast construction spending rising 0.6 percent in October.

The upbeat construction data suggests some momentum in the economy early in the fourth quarter. Weak durable goods orders data has raised concerns of a sharp moderation in the pace of growth in the final three months of the year.

The economy grew at a 3.9 percent annual pace in the third quarter.

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In October, private construction spending increased 0.6 percent, with outlays on residential projects recording their biggest rise since December of last year. Residential spending was boosted by increases in both single and multi-family homes as well as renovations.

Spending on public construction projects increased 2.3 percent in October, buoyed by a 19.3 percent surge in federal government outlays, the largest such increase since October of 2006.

State and local government investment increased 0.9 percent after two straight months of declines.

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Construction spending logs biggest gain in 5 months