Construction spending rebounded in February as both public and private outlays increased, bolstering views of faster economic growth in the first quarter.
Construction spending advanced 1.2 percent to an annual rate of $885.1 billion, the Commerce Department said on Monday. Spending had declined 2.1 percent in January.
Economists polled by Reuters had expected construction spending to rise 1 percent in February.
The construction report added to a series of other data that have suggested economic growth accelerated in the first quarter from the fourth quarter's anemic 0.4 percent annual pace.
Despite tighter fiscal policy, data on employment, consumer spending and factory activity have been relatively strong, leaving economists scrambling to raise their forecast.
First-quarter GDP growth estimates currently range as high as a 3.5 percent annual rate.
Construction spending in February was boosted by a 1.3 percent rise in private construction projects. Spending on private residential projects increased 2.2 percent to the highest level since November 2008.
Part of the increase reflected renovations. The housing market is no longer a drag on the economy and residential construction contributed to growth last year for the first time since 2005. It is expected to do so again this year.
Spending on private nonresidential structures rose 0.4 percent after declining 5.9 percent.
Public sector construction spending increased 0.9 percent, rising for a second straight month. Outlays on federal government projects fell 1.1 percent. However, state and local spending, which is far larger than federal projects, rose 1.1 percent. It was the second straight month of gain in state and local government outlays.
(Reporting By Lucia Mutikani; Editing by Neil Stempleman)