Construction and Manufacturing Still Strong, Prices Paid Elevated

- Construction Spending for September rose .5% versus estimates of a .5% increase and an upwardly revised .6% gain in August.
- ISM Manufacturing for October rose to 59.1 versus estimates of 57.2 and a reading of 59.4 in September.
- ISM Prices Paid for October rose to 84.0 versus estimates of 75.0 and a reading of 78.0 in September.

BOTTOM LINE: US construction spending rose for a third straight month in September, led by the biggest rise in homebuilding since February, Bloomberg reported. Construction will remain strong over the intermediate-term as hurricane rebuilding begins in earnest.

US manufacturing expanded in October at the second-fastest pace this year and an index of factory costs unexpectedly rose, Bloomberg reported. Corporate equipment upgrades, as well as declining inventories and hurricane rebuilding should continue to boost manufacturing. This reading was significantly higher than the 10-year average of 52.4. The order backlogs component of the index rose to 55.5 from 55.0 in September. The recent strength in manufacturing is amazing considering the hurricane-related disruptions along the Gulf coast. I expect manufacturing to remain strong through year-end. I also believe we are seeing a cyclical peak in inflation readings and the prices paid indices will decelerate over the intermediate-term.