Market - - Jan 04,2017
The U.S. construction spending surged tremendously in the month of November, touching the highest mark in ten and a half years.
On Tuesday, the Commerce Department revealed that the construction spending rose by 0.9 percent to $1.18 trillion. This is the highest level which has reached since April 2006. Experts are viewing this boost as a positive factor for lifting the fourth quarter economic growth.
The level of gains in both public and private sector investment are termed responsible for the boost.
Economists had forecasted the construction spending in the U.S. to be up by 0.6 percent in November. This unexpected increase in November and October's growing revision to construction spending could alert economists to enhance their gross domestic product predictions for the fourth quarter.
It was noted that, the spending on private construction projects bounced by 1.0 percent in November to reach its highest position since July 2006. One of the prime reasons was the increase in the demand for single-family home building as well as home renovations. Moreover, investment in private nonresidential structures such as hospitals, factories and roads rose by 0.9 percent.
On the other hand, public construction spending boosted by 0.8 percent in November reaching its top spot since March. Investments on state and local government construction projects hiked 0.6 percent, gaining for a consecutive fourth month. Federal government construction spending also jumped 3.1 percent after advancing 0.2 percent in the month of October.
According to economists, construction will show gains in the current year as well, reflecting a strengthened market with the level of unemployment at its lowest in the past nine years.
President Barack Obama tried for several years to convince the Congress for approving higher infrastructure spending, but his efforts were blocked by the Republicans who criticized that the projects would toll up budget deficits.