WASHINGTON (AP) – Oct. 1, 2018 – Spending on U.S. construction projects edged up a slight 0.1 percent in August as a strong gain in government spending offset weakness in home building and nonresidential construction.

The Commerce Department said Monday that the rise, which followed a 0.2 percent July increase, put total construction at a seasonally adjusted annual rate of $1.32 trillion. That was down a slight 0.4 percent from a record high set in May.

Residential construction fell 0.7 percent in August while nonresidential construction edged down 0.2 percent. Those declines were offset by a strong 2 percent rise in public construction, which increased to the highest level since July 2009. Spending for federal and state and local projects increased.

Construction activity is contributing to solid overall growth although home building has faced a number of challenges this year.

Builders have had to deal with rising costs for land, lumber and labor. Part of the rise in lumber prices is attributed to the higher tariffs the Trump administration has imposed on Canadian softwood lumber.

For August, construction of single-family homes dropped 0.7 percent while spending on multi-family projects fell 1.7 percent.

In the non-residential categories, spending on commercial projects, a category that covers shopping centers, fell 0.9 percent for while spending on office buildings was up 0.8 percent.

The advance in spending for government projects included a 5.9 percent increase for federal projects and a 5.9 percent surge in state and local construction, a gain which pushed this category to the highest level since March 2009.

The overall economy, as measured by the gross domestic product, grew at a robust 4.2 percent annual rate in the April-June quarter and economists are forecasting that growth will come in at a still solid 3 percent rate in the second half of this year.

The National Association for Business Economics released a new forecast Monday projecting that GDP growth for the whole year would hit 2.9 percent. That would be a significant acceleration from last year's 2.2 percent growth rate.

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