Construction Spending Jumps 2.1% : Economy: The Commerce Department puts the November figure at $441.8 billion, the highest in two years.

Construction spending rose in November to the highest level in two years, the government reported Monday.

The Commerce Department said spending on residential, non-residential and government construction jumped 2.1% to $441.8 billion, up from $432.8 billion in October.

“I would expect the residential numbers will continue to climb modestly as the housing market continues to strengthen,” said David Berson, an economist with the Federal National Mortgage Assn.

“But some sectors, such as apartments and office buildings, are likely to remain weak for awhile because of high vacancy rates,” he added.

A survey of mid-size companies released on Monday also pointed to a slowly improving economy during the January-March quarter, compared to the previous three months.

But while members of the American Business Conference predicted modest improvements in key business indicators, including sales and investment, only 34% of the companies planned to expand employment--a net increase of 9% from the last survey.

Twenty-five percent expected lower employment, and 41% foresaw no change in the number of jobs.

“Our companies are telling us that in the current economic environment, business success means keeping margins razor thin while emphasizing productivity gains among the existing work force,” explained Barry Rogstad, the conference president.

“ABC members don’t yet see much room for expansion either in profits or job creation.”

November’s construction spending represented the third straight increase and hit the highest level since it reached $443.3 billion in August, 1990. But the department also revised its preliminary estimate of a 1% gain in October to just 0.8%.

Residential outlays increased 1.4% in November, to $193.5 billion, after gaining 2.4% a month earlier. It was the fourth straight advance.

Spending on single-family homes jumped 3.1%, to $126.5 billion, nearly matching a 3.3% advance in October.

But spending on apartments dropped 4.8%, to $11.8 billion, after sliding 1.6% the previous month. It was the third decline in a row.

“There have been two areas of real weakness over the past several years--apartment building and non-residential,” Berson said. “And for the same reason: There was significant over-construction during the 1980s and there remains considerable oversupply.”

Non-residential spending did post a 3.1% increase, to $87.2 billion, nearly double the 1.6% gain in October.

Berson said he does not expect improvements soon in many areas of this sector--including office buildings and “other commercial” projects such as shopping centers, which were overbuilt in many parts of the country.

“But as the economy expands, I would expect other non-residential areas, such as factories, to pick up as firms begin to spend on plants and equipment,” he said.

Governments boosted their spending 3.2%, to $122.2 billion, wiping out a 1.7% decline in the previous month.

Construction Spending Billions of dollars, seasonally adjusted Nov., ‘92: 441.8 Oct., ‘92: 432.8 Nov., ‘91: 401.2 Source: Commerce Department