The dollar value of construction spending is up 0.4 percent in November from October after a sizeable upward revision to up 1.2 percent in October from September. Construction spending is up 11.3 percent compared to a year ago. The November month-over-month increase is somewhat below the consensus of up 0.6 percent in the Econoday survey, but the revision higher in October indicates that spending remains solid. However, the November increase is entirely due to a 1.0 percent rise in residential spending while nonresidential dips 0.1 percent from the prior month.

Private residential spending is up 1.1 percent in November from October. Spending on construction of new single-family homes is up 2.9 percent and consistent with the recent trend where lack of supply in the existing home market is spurring new building. Spending on multi-unit products is up a scant 0.1 percent in November, reflecting slower conditions in the multi-unit market now that higher mortgage rates have discouraged some renters from looking at becoming homeowners. Spending on home improvement total private residential less single- and multi-unit spending is down 0.8 percent in November from October. Current homeowners who have low mortgage rates are not presently refinancing their homes to fund upgrades and repairs.

Total private nonresidential construction is up 0.2 percent in November from October. Much of the increase is due to spending in the manufacturing sector and power infrastructure which are up 0.5 percent and up 0.8 percent, respectively. Total public construction is down 0.7 percent in November from October and reflects broad-based declines.

Construction spending has yet to show much effect from rising financing rates. After rising by 0.6 percent in October, spending in November is expected to rise by another 0.6 percent.

The dollar value of new construction activity on residential, non-residential, and public projects. Data are available in nominal and real (inflation-adjusted) dollars.

Construction spending has a direct bearing on stocks, bonds and commodities because it is a part of the economy that is affected by interest rates, business cash flow and even federal fiscal policy. In a more specific sense, trends in the construction data carry valuable clues for the stocks of home builders and large-scale construction contractors. Commodity prices such as lumber are also very sensitive to housing industry trends.

Businesses only put money into the construction of new factories or offices when they are confident that demand is strong enough to justify the expansion. The same goes for individuals making the investment in a home.

A portion of construction spending is related to government projects such as education buildings as well a highways and streets. While investors are more concerned with private construction spending, the government projects put money in the hands of laborers who then have more money to spend on goods and services.

On a technical note, construction outlays for private residential, private nonresidential, and government are key inputs into three components of GDP--residential investment, nonresidential structures investment, and the structures portion of government expenditures.

That is why construction spending is a good indicator of the economy's momentum.