The Two-Way
10:34 am
Tue January 3, 2012

Construction Spending Increases, Signaling Continued Economic Growth

In yet another sign that the economy is limping forward, the Commerce Department said today that spending on construction rose 1.2 percent in November for the third time in four months.

As is always the case with this news, there are two ways to take it: First that the number defied economists' expectations and it means continued growth for the U.S. economy. But, as the AP reports, the number "pushed spending to a seasonally adjusted annual rate of $807.1 billion, still barely half the $1.5 trillion that economists consider healthy."

Bloomberg reports on the bigger picture:

"In November, builders broke ground on more homes than at any time in the previous 19 months and construction permits climbed to a one-year high, suggesting housing may not be a drag on gross domestic product next year, data from the Commerce Department showed last month.

"Housing starts were at a 685,000 annual rate that month, Commerce Department figures showed Dec. 20. Building permits, a proxy for future construction, increased 5.7 percent.

"Homebuilder sentiment has improved as well. The National Association of Home Builders/Wells Fargo sentiment index rose in December for a third consecutive month, to the highest level since May 2010."

The Commerce Department also revised October's numbers to a 0.2 percent drop.

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