Construction Spending Up 1.3% in September : Economy: It was the strongest pace of growth in five months, Commerce Department says.

Spending for private and government-financed construction projects, such as housing and new sewers, picked up at the strongest pace in five months during September, the Commerce Department said Monday.

Total construction spending grew to a seasonally adjusted annual rate of $428.5 billion, a 1.3% rise from August levels. That wiped out a drop of 1.1% in August spending, a figure revised from the previously reported 0.8%.

The rise in September spending was the biggest percentage increase since a 1.4% gain in April, department officials said.

But economists noted that the pickup in construction in September depended heavily on more new-home building. New construction spending for the full third quarter weakened from the second quarter.

In another mildly upbeat report, the nation’s corporate purchasing managers said in a survey released Monday that the manufacturing economy continued to grow modestly in October, but an increase in new orders and production levels failed to result in new jobs.

The National Assn. of Purchasing Management said its widely followed index registered 50.6% in October. That followed September’s 49%--the lowest point reached on the index since January. A reading above 50% generally indicates the manufacturing economy is expanding; a reading below 50% indicates a decline.

Commenting on construction spending, economist David Seiders of the National Assn. of Home Builders said, “Single-family building has to keep moving up or the entire construction spending picture will at least go flat, because the decline in non-residential spending has not yet run its course.”

Total private construction spending picked up to a seasonally adjusted annual rate of $309 billion in September from $305.7 billion in August.

Within that category, spending on new housing increased to a rate of $133 billion in September from $129.8 billion, accounting for much of the overall gain in construction activity.

By contrast, spending on non-residential building construction was barely up, increasing to a seasonally adjusted annual rate of $80 billion from $79.9 billion.

For example, spending on new office buildings--which are plagued by high vacancy rates in many cities as a result of overbuilding during the 1980s--fell to a rate of $14.4 billion in September from $15.4 billion in August.

Total government spending on construction projects expanded to an annual rate of $119.6 billion in September, up from $117.1 billion in August. Spending to build new sewers and highways rose, as did spending on conservation and industrial projects. But expenditures on education and water projects declined from August levels.