U.S. construction spending rose more than expected in November, reaching its highest level in 10-1/2 years, which could provide a lift to fourth-quarter economic growth.
The Commerce Department said on Tuesday that construction spending increased 0.9 percent to $1.18 trillion, the highest level since April 2006. It was boosted by gains in both private and public sector investment
Construction spending in October was revised up to show a 0.6 percent rise instead of the previously reported 0.5 percent increase. Construction spending was up 4.1 percent from a year ago in November.
Economists polled by Reuters had forecast construction spending rising 0.6 percent in November. November's better-than-expected increase and October's upward revision to construction spending could prompt economists to raise their gross domestic product estimates for the fourth quarter.
Spending on private construction projects jumped 1.0 percent in November to its highest level since July 2006 as single-family home building, as well as home renovations, increased.
Investment in private nonresidential structures — which include factories, hospitals and roads — rose 0.9 percent after tumbling 1.5 percent the prior month.
Public construction spending gained 0.8 percent in November to the highest level since March. It was the fourth straight month of increases. Outlays on state and local government construction projects rose 0.6 percent, also gaining for a fourth consecutive month.
Federal government construction spending surged 3.1 percent after rising 0.2 percent in October.
Economic activity in the manufacturing sector expanded in December, according to The Institute for Supply Management on Tuesday, and the overall economy grew for the 91st consecutive month.
The U.S. manufacturing index was hit 54.7, an increase of 1.5 percentage points from the November reading of 53.2 percent. Economist expected the index to hit 53.5 for December, according to a Thomson Reuters consensus estimate.
The ISM manufacturing index has topped 50 for nine of the last 10 months. A reading above 50 indicates expansion in the manufacturing sector and a reading below 50 indicates contraction.
"Of the 18 manufacturing industries, 11 are reporting growth in December," Bradley Holcomb, chair of the Institute for Supply Management, said in the report.
U.S. factories are steadily rebounding from a rough patch hit in late 2015 and early 2016. The decline in energy prices caused cutbacks in orders for equipment and pipelines, while a stronger dollar and slower economic growth abroad hurt exports.
—CNBC's Berkeley Lovelace and The Associated Press contributed to this report.