WASHINGTON--New home building drove gains in U.S. construction spending in February, which more than offset lower investments in federal projects.
Overall construction spending grew 1.2% in February to a seasonally adjusted annual rate of $885.13 billion, the Commerce Department said Monday. It was the largest increase since November and comes after spending unexpectedly dropped 2.1% for January.
The results were above expectations. Economists surveyed by Dow Jones Newswires had forecast a 1.0% increase.
Leading the gain were increases in residential and commercial construction.
Spending on private home building rose 2.2% since the prior month, with single-family home building rising 4.3% to $158.07 billion in February. The housing sector has been a driver of economic growth for seven straight quarters through the end of 2012.
Total private nonresidential construction, which includes spending on offices, power infrastructure and factories, rose a modest 0.4% to $309.64 billion in February.
Meanwhile, government spending was mixed ahead of anticipated budget cuts that took effect in March. Spending on federal construction projects dropped 1.1% for the month, compared with a 1.1% gain for building by state and local governments.
Sharp, across-the-board federal spending cuts, known as the sequester, started in early March. Reduced funding from Washington for infrastructure projects could trickle down to the local level.
The gains in the housing figures come as the number of new single-family homes started in February rose to a nearly five-year high. Overall housing starts increased as well, the Commerce Department said last month.
Still, home builders have said they are feeling less optimistic about market conditions as prices for supplies go up and fewer lots are available for construction.
The Commerce Department report on construction spending can be found at http://www.census.gov/construction/c30/c30index.html
Write to Sarah Portlock and sarah.portlock@dowjones.com and Jeffrey Sparshott at jeffrey.sparshott@dowjones.com.
Overall construction spending grew 1.2% in February to a seasonally adjusted annual rate of $885.13 billion, the Commerce Department said Monday. It was the largest increase since November and comes after spending unexpectedly dropped 2.1% for January.
The results were above expectations. Economists surveyed by Dow Jones Newswires had forecast a 1.0% increase.
Leading the gain were increases in residential and commercial construction.
Spending on private home building rose 2.2% since the prior month, with single-family home building rising 4.3% to $158.07 billion in February. The housing sector has been a driver of economic growth for seven straight quarters through the end of 2012.
Total private nonresidential construction, which includes spending on offices, power infrastructure and factories, rose a modest 0.4% to $309.64 billion in February.
Meanwhile, government spending was mixed ahead of anticipated budget cuts that took effect in March. Spending on federal construction projects dropped 1.1% for the month, compared with a 1.1% gain for building by state and local governments.
Sharp, across-the-board federal spending cuts, known as the sequester, started in early March. Reduced funding from Washington for infrastructure projects could trickle down to the local level.
The gains in the housing figures come as the number of new single-family homes started in February rose to a nearly five-year high. Overall housing starts increased as well, the Commerce Department said last month.
Still, home builders have said they are feeling less optimistic about market conditions as prices for supplies go up and fewer lots are available for construction.
The Commerce Department report on construction spending can be found at http://www.census.gov/construction/c30/c30index.html
Write to Sarah Portlock and sarah.portlock@dowjones.com and Jeffrey Sparshott at jeffrey.sparshott@dowjones.com.
