Construction spending is down 0.1 percent in August after a downward revision to down 0.5 percent in July. Construction spending is above the consensus of down 0.3 percent in the Econoday survey of forecasters. Construction spending is up 4.1 compared to a year ago. Total spending on residential building is down 0.3 percent in August and nonresidential is up 0.1 percent.

Private residential construction is down 0.3 percent in August and reflects a decrease of 1.5 percent in single-family home projects and 0.4 percent in multi-family building. However, spending on home improvement total private residential less single- and multi-unit building is up 1.0 percent in August. New homebuilding in August took a step back as builders and buyers both waited to see if financing costs would fall in anticipation of a rate cut by the FOMC on September 18.

Public construction is up 0.3 percent in August on a mixed performance across categories. However, spending on highway and street construction the largest category is up 1.1 percent in the month,

Construction spending is expected to decline 0.3 percent in August, the same as in July.

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.