WASHINGTON — U.S. construction spending increased 1.4 per cent in August, led by a surge in single-family homes.
The gain was double the 0.7 per cent increase in July, the Commerce Department reported, and the August gain was better than economists had been expecting.
In an additional sign of strength, the government revised higher its earlier estimates for spending in July and June.
Spending on residential construction rose 3.7 per cent, with a 5.5 per cent rise in spending on single-family homes offsetting a 0.1 per cent dip in apartment construction, a smaller and more volatile sector.
Spending on nonresidential construction fell by 0.3 per cent with hotels, office building and shopping centres all suffering declines.
Total government construction rose a slight 0.1 per cent with spending on highway projects up 1.9 per cent.
“While the outlook for nonresidential and public construction is less certain, the trend in residential should improve further, reflecting strong demand for homes as seen in new and existing home sales,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.