Spending on construction projects was recorded at a seasonally adjusted annual rate of $1.163 trillion, up 0.3 percent from August.

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Nonresidential construction was at a seasonally adjusted annual rate of $357.7 billion in September, 1.5 percent above the revised August estimate of $352.4 billion.

Construction spending on hotels in September came in at $34.2 billion, 6.1 percent above August and a whopping 76 percent above September 2006. More than $100 billion was spent on educational projects in September, up two percent from August and 18.1 percent from September 2006.

The rise in non-residential structures added 0.4 pp to GDP growth. Non-residential structure investment has soared since the fourth quarter of 2005, rising at a 13.3 percent annual rate. It currently accounts for 3.4 percent of GDP. Its share never exceeded 3.3 percent in the late 90s boom.

Simonson said there is a simple explanation for why the construction numbers are positive, as opposed to the housing numbers seen this year.

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Reports on the construction numbers and the GDP served as a Halloween treat for the White House.

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Simonson said landscape contracting companies have been able to recoup revenues lost as a result of the downturn in housing by working on more commercial projects.

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The construction industry may pull back economically slightly in 2008, Simonson said, due to a number of factors.

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Simonson also noted that credit wariness will have a negative impact in 2008 on construction spending, although he expects the power, hospital and education sectors to remain strong.

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