ConDiv (Apr-3-17).  US construction spending climbed to a near 11-year high in February amid increased investment in residential and private construction projects.

Latest figures from the Commerce Department show that construction spending edged up 0.8% to a seasonally adjusted rate of $1.19 trillion compared to an upward-revised total of $1.183 trillion in January, which is the highest level since April 2006. It was also up 3% on $1.157 trillion in the same period last year.

It comes as spending on residential construction surged 1.8% in February to its highest level since July 2007, while private construction spending nudged up 0.8% to its highest level since May 2006 and public construction spending rebounded 0.6% after posting drops over the past three months.

But spending on private nonresidential projects dipped 0.3%, building on falls over the past two months, but increased 7.5% year-over-year. The largest private nonresidential segment in February was power construction (including oil and gas pipelines), which posted a 3% rise from the month prior and 9.4% on the year-ago period.

Public construction spending rose 0.6% from January to February, but dropped by 8% from the the same period last year. Highway construction jumped up 1.3% for the month but was down 5.1% on February last year.

“While the overall market for construction continues to expand, public investments remain down for the year and private nonresidential activity could be much stronger,” said Ken Simonson, chief economist at the Associated General Contractors of America (AGCA).

“Two factors that are clearly holding back construction demand are relatively high effective tax rates for many businesses and uncertainty about future demand for public infrastructure upgrades.”

AGCA officials are pushing Congress and the Trump administration to work together on reforming tax rates for employers – including pass-through entities – and finding a way to rebuild the nation’s infrastructure.

“Congress and the President should be able to find common ground on securing our continued economic success,” said Stephen E. Sandherr, the chief executive officer of AGCA.

“Making our effective business tax rate more competitive and modernizing our aging infrastructure will go a long way in boosting economic activity and demand for construction.”