US construction spending climbed in August to highest level in 7 years, led by housing

WASHINGTON – Spending on U.S. construction projects rose in August to the highest point in more than seven years, fueled by home building and government projects.

Construction spending in August increased 0.7 per cent from July, when it had risen 0.4 per cent, the Commerce Department said Thursday. It rose to a seasonally adjusted annual rate of $1.09 trillion, the highest level since May 2008.

The latest result suggests that businesses remain confident enough in the economy to expand. Construction activity is expected to provide solid support for the overall economy for the rest of the year.

The gains were led by gains of 1.3 per cent in home building and 0.5 per cent in government construction projects.

Private nonresidential construction also advanced, but by a more modest 0.2 per cent. Two key areas — office building and the category that covers shopping centres — both declined.

The 1.3 per cent rise in home construction reflected a 4.8 per cent surge in apartment construction and a more modest 0.7 per cent rise in construction of single-family homes.

The 0.5 per cent rise in government construction projects was driven by a 0.5 per cent rise in state and local projects and a 0.6 per cent rise in federal building projects.

The overall economy, as measured by the gross domestic product, expanded at an annual rate of 3.9 per cent in the April-June quarter.

Business spending on structures grew at a 6.2 per cent rate during the spring while construction of homes was growing at an even faster 9.3 per cent rate after gains of 10 per cent over the previous six months.

Economists are forecasting home construction will show further gains in coming months.

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