· The value of construction put in place fell again October. The 0.8% decline followed a modest 0.2% uptick during September but the three month growth in activity has stabilized at -1.0% (AR), an improvement from the double digit rate of decline last Autumn.

· Residential building dropped another 2.0% m/m and the three month change was -17.2% (AR), a stable rate of decline since the middle of last year. Building of new single family units, however, showed no sign of stabilizing or bottoming and produced a 4.0% (-26.4% y/y) fall m/m in October. To the upside, spending on improvements gained 0.7% (5.1% y/y) and the three month growth rate shot up to 23.5% (AR).

· During the last twenty years there has been an 84% correlation between the q/q change in the value of residential building and its contribution to growth in real GDP.

· Nonresidential building fell slightly for the first decline in about one year. Three month growth remained stable, however, at a positive 16.0% (AR). The 1.2% rise in office construction (20.3% y/y) lifted three month growth to 44.7%, and multi-retail building activity rose 1.6% (12.6% y/y). The shortfall in October nonresidential activity was due partly to a modest 0.1% (11.8% y/y) uptick in commercial construction which followed several months of little or negative change. Also, the 1.8% (20.9 y/y) rise in educational facility building followed two months of just slight increase.

· Strength in public construction spending was evident in a 0.8% October rise and the firm three month growth rate of 12.3% was stable. Construction on highways & streets rose 0.8% (9.2% y/y) after two months of double digit gain. The value of construction on highways & streets is nearly one third of the value of total public construction spending. Construction spending on education again was firm and grew 2.1% (18.2% y/y).

· These more detailed categories represent the Census Bureau’s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.