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US construction spending posts biggest increase in nine months
[WASHINGTON] US construction spending surged in January, with investment in public projects rising to a more than eight-year high, which could boost economic growth estimates for the first quarter.
The Commerce Department said on Wednesday that construction spending jumped 1.3 per cent, the largest increase since last April, after a revised 0.8 per cent drop in December.
Economists polled by Reuters had forecast construction spending rising 0.4 per cent in January after a previously reported 0.6 per cent drop in December.
Construction spending increased 0.3 per cent on a year-on-year basis in January. The release of the January report was delayed by a five-week partial shutdown of the government that ended on Jan 25. The February construction spending report will be published on April 1 as scheduled.
In January, investment in public construction projects increased 4.9 per cent to its highest level since September 2010. The increase was the largest since March 2004 and followed a 1.0 per cent drop in December.
Spending on federal government construction projects increased 4.2 per cent to the highest level since October 2017 after plunging 1.9 per cent in December. Investment in state and local government construction projects jumped 4.9 per cent to a 9-1/2-year high after falling 1.0 per cent in the prior month.
Spending on private construction projects rose 0.2 per cent in January after declining for two straight months. Investment in private residential projects dropped 0.3 per cent, falling for the sixth straight month.
The housing market has been weighed down by higher mortgage rates, expensive building materials as well as land and labor shortages. Investment in homebuilding contracted 0.2 per cent in 2018, the weakest performance since 2010.
Spending on private nonresidential structures, which includes manufacturing and power plants, rose 0.8 per cent in January after increasing 0.6 per cent in December.