The 0.5% October construction spending bounce
The 0.5% October construction spending bounce tracked estimates, but it followed big Q3 boosts led by the public and nonresidential components that left a strong report overall. The warm start to the winter season apparently provided little lift to growth in October, though analysts expect a boost in to year-end. The October data showed a solid start for new residential and public construction in Q4, but a pull-back in nonresidential and home improvement spending. Analysts now expect a Q3 GDP growth boost to 3.3% from 3.2% with hikes of $4 B in public construction and $2 B in nonresidential construction. Analysts still expect 1.8% GDP growth in Q4, but with a 14% Q4 growth rate for residential construction after a 4.4% Q3 contraction rate, a 4% Q4 contraction rate for nonresidential construction after an estimated 12.1% (was 10.1%) surge in Q3, and a 1% growth rate for government spending after a 0.8% (was 0.2%) pace in Q3.