U.S. developers ramped up construction spending in February to the largest amount in nearly 11 years, led by more building of homes, highways and schools.
Construction spending rose 0.8 per cent in February to the highest level since April 2006, after two months of declines, the Commerce Department said.
Builders are rapidly putting up more homes in response to strong demand that has pushed up prices for existing homes. Yet it hasn’t yet been enough to relieve a shortage of homes for sale. The accelerated building could boost the economy this year.
State and local governments spent 0.9 per cent more on construction, driven by roads, schools and recreational buildings.
The federal government, meanwhile, cut construction spending for the second straight month and has cut back 9 per cent from a year ago.
President Donald Trump has pledged to reverse that trend by boosting infrastructure spending by $1 trillion over the next decade. Yet it’s unclear when legislation to bring about such an increase will be introduced.
State and local governments have also spent less on construction in the past year. They are spending 8 per cent less compared with February 2016. Infrastructure concerns have resurfaced after a large fire last week caused the collapse of a highway bridge outside Atlanta, snarling rush-hour traffic.
The construction of commercial buildings such as hotels, office towers, and hospitals fell 0.3 per cent in February, the second straight decline. Yet commercial construction has risen 7.5 per cent in the past year.
Spending on new home building, as well as renovations, rose nearly 10 per cent in the final three months of 2016, the most in a year and providing a critical boost to growth.
The nation’s economy expanded at a 2.1 per cent annual rate in the fourth quarter, with housing-related construction accounting for one-third of a percentage point.