Spending on projects in U.S. up 1.3 percent

Spending on U.S. construction projects in January posted the biggest gain in nine months, as strength in nonresidential construction and government projects offset continued weakness in home construction. The Commerce Department says construction spending rose 1.3 percent in January following two months of declines. It was the biggest gain since spending was up 1.7 percent in April.

The situation

Spending on residential projects fell 0.3 percent in January, the sixth consecutive monthly decline for a sector that was hurt last year by rising mortgage rates and higher home building costs.

Spending on nonresidential construction increased 0.8 percent in January with spending on office buildings, hotels and the category that covers shopping centers all showing gains.

January strength

Spending on government projects jumped 4.9 percent, the biggest increase since March 2004. The January strength reflected a 4.9 percent rise in spending on state and local building projects and a 4.2 percent rise in federal construction spending.

It pushed total public construction spending to a seasonally adjusted annual rate of $313.6 billion, the highest level since September 2010. The 1.3 percent overall gain pushed total spending to a seasonally adjusted annual rate of $1.28 trillion.

1.3 percent

Rise in construction spending in January

0.3 percent

Fall in spending on residential projects in January

0.8 percent

Increase in spending on nonresidential construction in January

4.9 percent

Increase in spending on government projects in January, the biggest increase since March 2004

Growth

Economists believe growth has slowed further to around 1.5 percent in the current quarter as the U.S. economy feels the effects of a global slowdown.

KEITH SRAKOCIC / ASSOCIATED PRESS The Commerce Department reported spending on residential projects fell 0.3 percent in January, the sixth consecutive monthly decline.