Construction spending edged up 0.1% in January to a seasonally adjusted annual rate of $943.1 billion, according to a Commerce Department report (link opens as PDF) released today.
After increasing 0.1% for December, analysts were pleasantly surprised, having expected January spending to slump 0.2%.
Private construction spending increased 0.5%, pushed higher by a 1.1% boost in residential construction. These data suggest that builders may be making moves to reverse a recently emerging housing supply squeeze. Single-family home spending increased 2.3%, while multifamily home spending increased 1.0%.
Nonresidential construction decreased 0.2%, with communication making the biggest gains (+18.2%) and power construction taking the biggest dip (-5.0%).
Public construction spending tapered off in January, dropping 0.8%. Although highway spending increased 3.7%, a 1.8% drop in education spending put a damper on growth.
Economists had expected the January weakness, believing that construction, like other parts of the economy, would be slowed by the unusually cold weather. However, the expectation is that builders will see better gains once spring and warmer weather arrive.
Comparing January's report to a year ago, overall construction spending is up 9.3%.
-- Material from The Associated Press was used in this report.