A very good indicator of current construction activity, thus future lumber prices, is US construction spending. New data out this week from the US Commerce Department shows construction spending flat in September 2018 after a 0.8 per cent rise in August, said the New York Times Thursday. Spending on US construction projects was essentially unchanged in September, the weakest showing since June, as an increase in home construction was offset by a slide in spending on government projects.
The strength last month was driven by a 0.6 per cent increase in residential construction and a smaller 0.1 per cent increase in nonresidential activity, which pushed this category to an all-time high. However, these gains were offset by a 0.9 per cent drop in spending on government projects.
The increase in residential construction featured an 8.7 per cent jump in apartment construction, which offset a 0.8 per cent drop in single-family homes.
Drilling down to more detail, the National Association of Home Builders said it’s analysis of Census Construction Spending data shows that total private residential construction spending inched up 0.6 percent in September, after a dip of 0.4 percent in August. On a quarterly basis, private residential construction spending climbed 0.9 percent in the third quarter. Private residential construction spending increased in September, despite the decline of the total housing starts amidst the shortage of construction labor and land, rising mortgage rates, and ongoing building material price volatility.
The monthly gains are largely attributed to the strong growth of spending on multifamily.