Economic Watch: Construction Spending Up, Holiday Sales Start Off Slow

December 2, 2014

By Evan Lockridge

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Construction spending in the U.S. posted its biggest increase in five months during October, according to a new Commerce Department report released Tuesday.

October construction spending was up 1.1% from September’s revised estimate and 3.3% higher than the same time a year ago. September was originally reported as falling 0.4% from the month before but was revised to a 0.1% decline.

For the first 10 months of the year, total construction spending is 5.8% higher than during the same time last year.

The overall hike was led by a 2.3% gain in public construction projects, including a 1.1% increase in highway building. A private construction gain of 0.6% included a 1.3% improvement in residential construction, its largest gain since last December.

Meantime, separate figures show holiday retail sales stumbled out of the starting block this year. Early indications suggest Black Friday spending was lackluster, with sales over the entire Thanksgiving weekend down 11% over the previous year.

According to IBM, Cyber Monday sales, while positive, fell short of expectations, rising just 8% compared to a projected gain of 13% to 15%.

With gasoline prices down markedly over the past few months leaving consumers with extra cash in their pockets, many retailers are scratching their head over the disappointing numbers. However, some analysts point out the reason may lie with retailers themselves.

This year many retailers started big sales well in advance of Black Friday that are continuing on through this week. Also consumers are reportedly using their mobile phones and other portable devices to find the best deals between brick and mortar stores and online retailers.

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