U.S. construction spending in July climbed to its highest level in more than seven years, boosted by an increase in the building of houses, factories and power plants.
The Commerce Department said Sept. 1 that construction spending rose 0.7 percent to a seasonally adjusted annual rate of $1.08 trillion, the highest level since May 2008. The report also revised up the June increase in construction spending to 0.7 percent from 0.1 percent previously.
Groundbreakings for houses, apartment complexes and commercial centers have helped to improve overall economic growth. The government said the week of Aug. 24 that the U.S. economy expanded at an annual rate of 3.7 percent in the April-June quarter, after having edged up just 0.6 percent in the first quarter.
“We expect housing activity will continue to strengthen, underpinning greater residential investment in the coming quarters,” said Gregory Daco, head of U.S. macroeconomics at the forecasting firm Oxford Economics.
Idaho has led then nation in construction job increases by percentage most of this year. Several high-profile construction projects are underway in the state, including Idaho Department of Transportation overpass projects. In southwestern Idaho, building projects include City Center Plaza, JUMP and the Simplot corporate headquarters in Boise, hotel construction in Ketchum and Coeur d’Alene, and Clif Bar plant construction in Twin Falls.
After the construction spending report was released Sept. 2, analysts at Barclays projected that the economy is on track to grow 2.6 percent during the third quarter and that the second quarter growth rate would be revised up to 3.8 percent.
Total construction spending has risen 13.7 percent over the past 12 months.
In July, construction of single-family houses advanced 2.1 percent. Factories rose 4.7 percent, and power facilities increased 2.1 percent.
Spending on government building projects slipped 1 percent, although they have risen over the past year largely because of the construction and maintenance of highways and streets.
The gains from residential construction have laid a foundation for broader economic growth since the beginning of 2014, after the sector suffered severe setbacks during the Great Recession due to the bursting of the housing bubble. The economy entered its seventh year of recovery this summer.
Other reports point to the strength in residential construction.
Housing starts rose 0.2 percent in July to a seasonally adjusted annual rate of 1.21 million homes, the government said last week. All of July’s gains came from construction of single-family houses, which climbed 12.8 percent to the highest level since December 2007.