October 1, 2009 – Quoting a new government report, Reuters noted today that U.S. construction spending unexpectedly rose at its fastest pace in nearly a year in August, with investment in private residential construction notching its biggest increase in almost 16 years.

The Commerce Department said spending on construction projects rose 0.8 percent, the largest increase since September 2008, after a revised 1.1 percent drop in July that was previously reported as a 0.2 percent decline.

Analysts polled by Reuters were expecting a 0.l percent fall in overall construction spending in August.

Compared to August a year ago, construction spending was down 11.6 percent.

Private construction spending rose 1.8 percent in August, also the biggest gain since September 2008, from a 1.4 percent decline in July. Private residential construction surged 4.7 percent, the largest advance since November 1993, after 0.6 percent rise the prior month.

The rise in private residential construction will bolster views that a housing market recovery is under way after a three-year slump, and bodes well for a third-quarter rebound in economic growth.

Spending on public construction fell 1.1 percent in August after slipping 0.7 percent in July.