Construction spending rose 0.4 percent in June following an upwardly revised 1.6 percent gain in May that was the biggest one-month increase since December, the Commerce Department reported Wednesday.
The June advance pushed spending to a seasonally adjusted annual rate of $842.1 billion, up 12.9 percent from a 12-year low hit in February 2011. Still, the level is roughly half of what economists consider to be healthy. The construction industry has been flashing signs of improvement while other sectors of the economy have slowed.
For June, the strength came from a 1.3 percent increase in spending on housing, the fifth gain this year.
The housing gain pushed activity in this category to an annual rate of $265.6 billion. Spending on private nonresidential building projects edged up a slight 0.1 percent to an annual rate of $302.3 billion after much bigger gains over the past three months. In June, spending for office construction and hotel projects both rose but spending in the category that includes shopping centers declined.
Spending on government building projects was essentially unchanged at an annual rate of $274.2 billion in June. Government construction spending has been down or unchanged in five of the last six months. That reflects the continued restraints facing governments at all levels who are struggling to deal sizable budget problems.
For June, spending at the state and local level edged up 0.2 percent while spending at the federal level fell by 1.6 percent.