Construction Spending: Surprise Spending On Manufacturing Plants

Bottom Line:   Construction spending unexpectedly rose in September, and there were positive revisions to data from earlier in the quarter. A sharp increase in construction related to manufacturing industries drove the gains. Despite the cyclical slowdown in manufacturing, industries invested in new capital projects that required construction after years of few, if any, investments. Residential construction, still the largest construction segment, was only down marginally in September but was still down over 8% annualized in the quarter. Overall, investments in new manufacturing facilities will help relieve the blow of sharply slower residential spending, but it won't be enough to shift construction from becoming a drag on growth over the remainder of the year.