WASHINGTON – Construction spending (search) rose a solid 0.5 percent to a record level in March, as strong building activity at offices and shopping malls helped offset a slowdown in housing construction.
The Commerce Department (search) said Monday that the increase pushed total construction activity to a seasonally adjusted annual rate of $1.05 trillion, an all-time high. The advance followed a similar 0.5 percent gain in February and a 0.4 percent rise in January.
The March performance was stronger than the 0.3 percent increase that economists had been expecting. They are looking for construction activity to remain strong this year as long as interest rates continue rising at a gradual pace.
Federal Reserve (search) officials meet again on Tuesday, and economists are expecting another quarter-point boost in a key lending rate controlled by the Fed. Analysts believe the central bank will keep raising interest rates at a moderate pace as long as higher energy costs do not trigger increased pressure on overall inflation rates.
Construction spending in March included a 0.3 percent rise in private residential building, a sharp slowdown from a 1.1 percent increase in February.
However, nonresidential private construction was up 1.1 percent in March, a rebound from a 1.4 percent drop in February. It was the biggest one-month gain in this category in five months.
The strength in this area was led by a 2.6 percent jump in spending on office construction and a 2 percent rise in commercial building, a category that includes shopping malls.
Total private construction, residential and nonresidential, was up 0.5 percent to a seasonally adjusted annual rate of $815.5 billion in March.
Government construction, the other major building category, posted a 0.3 percent increase to an annual rate of $236.3 billion in March. State and local construction projects increased by 0.5 percent to an annual rate of $219.4 billion. Federal construction activity fell by 2.4 percent to an annual rate of $16.8 billion.