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Business Title: Construction Spending in U.S. Rose in November for Third Month Jan. 3 (Bloomberg) -- Construction spending in the U.S. rose in November for a third straight month, boosted by funding for homebuilding and federal government projects. The 0.4 percent increase exceeded the median forecast of economists surveyed by Bloomberg News and followed a 0.7 percent gain the previous month, Commerce Department figures showed today in Washington. The median estimate called for a 0.2 percent rise. Stimulus funding spurred government spending on schools, office buildings and water supply plants in November, while tight credit and high vacancy rates restrained private investment in factories and communications facilities. Outlays on home improvements and construction, backed by low lending rates and pent-up demand, is also sustaining the industry. “Public spending will increase as the stimulus funds are put to use,” Michelle Meyer, a senior economist at Bank of America Merrill Lynch Global Research in New York, said before the report. “Residential will grow next year but only marginally, while commercial construction will continue to be a drag.” The median forecast was based on 44 projections in a Bloomberg survey. Estimates ranged from a drop of 0.8 percent to a 0.7 percent increase. Construction spending decreased 6 percent in the 12 months ended in November. Private construction spending climbed 0.3 percent from the previous month. Homebuilding outlays increased 0.7 percent, while private non-residential projects dropped 0.1 percent. Public Works Spending on public construction increased 0.7 percent from the prior month. Federal spending rose 8.2 percent, to reach a record-high $35.3 billion. Outlays by state and local governments dropped 0.1 percent, a second consecutive decline. Average home prices as measured by the S&P/Case-Shiller indexes have begun dropping again after rising when a government tax incentive was in effect. The group’s 20-city index fell 0.8 percent in October from a year earlier, the biggest year-on-year decline since December 2009. It fell 1 percent from the prior month, and was down 30 percent from its July 2006 peak. Builders are pulling back. Reports last month showed the housing market is stuck near recession levels. Housing permits fell in November to the third-lowest level on record, while new- home starts rose for the first time in three months, the Commerce Department reported Dec. 16. Hovnanian Enterprises Inc., the largest homebuilder in New Jersey, on Dec. 22 reported a fourth-quarter loss bigger than analysts expected as revenue fell 19 percent. “Consumers are clearly waiting to see signs of an economic recovery and job growth before they make their decision to purchase a home,” Chief Executive Officer Ara Hovnanian said on a conference call.
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