U.S. construction spending in December is estimated to have risen more than expected, up 0.5 percent compared to expectations of a 0.3 percent increase in the Econoday survey of forecasters. November is revised from being flat to increasing by 0.2 percent from October. The estimated level of construction spending in December is 4.3 percent higher than December 2023.

The value of construction in 2024 is 6.5 percent above the amount spent in 2023.

Private construction spending in December rose 0.9 percent from November, with residential construction up 1.5 percent and non-residential rising by a mere 0.1 percent. The value of private construction in 2024 is 5.6 percent higher than 2023. Residential construction jumped 5.9 percent, and nonresidential construction climbed 5.3 percent compared to 2023.

Public construction spending saw a 0.5 percent uptick from November.

The consensus looks for another moderate uptick of 0.3 percent for December from November.

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.