WASHINGTON—U.S. construction spending rose a solid one per cent in February, led by a strong gain in spending on government projects, which hit an all-time high.
The February increase followed an even larger 2.5 per cent gain in January and a slight 0.2 per cent rise in December, the Commerce Department reported. The gains pushed total construction to a seasonally adjusted annual rate of $1.32 trillion, the highest level since May.
Residential construction was up 0.7 per cent. Government construction jumped 3.8 per cent to $303 billion, the highest level on record.
Weakness in home building has been a drag on overall growth, but analysts believe housing construction should rebound this year, helped by lower mortgage rates following the signal by the Federal Reserve that it plans to hold rates steady this year.
Spending on private nonresidential projects dropped 0.5 per cent in February, with office construction down 0.4 per cent and the sector that includes shopping centres falling 0.8 per cent. Spending on hotel and motel construction managed a small 0.1 per cent gain.
The big increase in spending on government projects was led by an increase of 3.8 per cent in state and local construction projects.
For all of 2018, construction spending rose 3.9 per cent to a record high of $1.29 trillion. It marked the seventh annual increase after construction had fallen for five straight years starting in 2007 with the collapse of the housing bubble.