U.S. 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 percent, the largest increase since last April, after a revised 0.8 percent drop in December.
Economists polled by Reuters had forecast construction spending rising 0.4 percent in January after a previously reported 0.6 percent drop in December.
Construction spending increased 0.3 percent 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 percent to its highest level since September 2010. The percent increase was the largest since March 2004 and followed a 1.0 percent drop in December.
Spending on federal government construction projects increased 4.2 percent to the highest level since October 2017 after plunging 1.9 percent in December. Investment in state and local government construction projects jumped 4.9 percent to a 9-1/2-year high after falling 1.0 percent in the prior month.
Spending on private construction projects rose 0.2 percent in January after declining for two straight months. Investment in private residential projects dropped 0.3 percent, 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 percent in 2018, the weakest performance since 2010.
Spending on private nonresidential structures, which includes manufacturing and power plants, rose 0.8 percent in January after increasing 0.6 percent in December.