Home builders and other construction companies increase spending in July, reflecting both higher demand and higher prices for materials.
Outlays rose 0.3% in July at a $1.57 trillion annual pace, the Commerce Department said Wednesday. That’s how much money would be spent on construction in the entire country this year if outlays rose by the same amount in every month.
Economists polled by the Wall Street Journal had expected a 0.2% increase.
The building trades play a big role in the U.S. economy, if at a somewhat diminished level compared to a few decades ago.
By and large, demand for housing is very strong because of ultra-low interest rates. Residential construction rose 0.5% in July.
Demand has cooled off lately, but only because a shortage of new and existing homes for sale has caused prices to soar and discourage prospective buyers. The cost of materials to build a house has also fed into higher prices.
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Other forms of construction, such as public works or commercial projects, increase 0.1% in July. State and local governments are primed to spend more after getting a huge dose of federal stimulus money.
That type of construction hasn’t keep pace with the boomlet of sorts in home building, however. Residential spending is up 26.5% over the past while nonresidential spending has only risen 0.5% in the same span.
The report rarely influences the stock market. The Dow Jones Industrial Average
DJIA,
and S&P500
SPX,
were narrowly mixed in Wednesday trades.