By MARTIN CRUTSINGER AP Economics Writer
WASHINGTON (AP) — U.S. construction spending rose a solid 1 percent 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 percent gain in January and a slight 0.2 percent rise in December, the Commerce Department reported on Monday. The gains pushed the total value of construction to a seasonally adjusted annual rate of $1.32 trillion, the highest level since May.
Spending on residential construction was up by 0.7 percent. Government construction increased by 3.8 percent to $303 billion, the highest level on record.
Weakness in home building has been a drag on economic growth, but analysts believe housing construction should rebound this year, helped by lower mortgage rates following the Federal Reserve’s signal that it plans to hold rates steady this year.
Spending on private nonresidential projects dropped by 0.5 percent in February, and office construction was down 0.4 percent. The sector that includes shopping centers fell by 0.8 percent. Spending on hotel and motel construction managed a small 0.1 percent gain.
The big increase in spending on government projects was led by an increase of 3.8 percent in state and local construction projects.
For all of 2018, construction spending rose 3.9 percent to a record high of $1.29 trillion. That marked the seventh annual increase after construction had fallen for five straight years, starting in 2007 with the collapse of the housing bubble.