Construction spending rose 0.8% in September entirely due to an implausible jump in residential remodeling which is unlikely to be sustained and could be revised away as was a similar jump earlier this year. Residential remodeling indicators all suggest that this market is continuing to slip lower. Even with the suspect jump in remodeling spending the reported September construction spending total was 0.2% below the initially reported total for August. This is due to large downward revisions for spending for both commercial buildings and manufacturing. The continuing revisions cutbacks in these markets suggest that work has been slowed or stopped on some previously started projects. These cutbacks are probably due partly to financing difficulties and partly due to second thoughts about the ability to rent new space or the ability use new facility capacity.

Overall, the shrinking commercial, multifamily, power and manufacturing markets are more than offsetting the now slowing gains in single family construction and the small rise in heavy construction spurred by the stimulus plan.