Construction Spending Gains 1% as Interest Rates Fall Back

WASHINGTON — Construction spending rose 1% in October, the government said today in a report that provided evidence that a slump in the building industry may be ending in response to lower interest rates.

The Commerce Department said spending rose $4.2 billion to a seasonally adjusted annual rate of $420.1 billion in October. The increase followed no change in September and a 1.5% gain in August. In October, residential construction, which accounts for nearly half of all building activity, rose 0.9% to an annual rate of $193.6 billion, reversing a 0.9% drop in September.

Analysts have been expecting the construction industry to begin rebounding in response to interest rate cuts by the Federal Reserve Board.