Bloomberg News

WASHINGTON - Record outlays for highways, streets, schools, and other public works lifted U.S. construction spending in December to its highest in any month, the Commerce Department reported Tuesday. Spending on housing construction also set a record.

Construction spending rose 2% in December, to a $730.3 billion annual rate, the same increase as the revised November number, the department reported. Analysts had expected spending to hold steady.

Mild weather, full government coffers, and rebuilding efforts after Hurricane Floyd probably contributed to December's gain in overall spending, the third in a row, analysts said. The increase also helped push the 1999 total up 6%, to $705.1 billion. Spending rose 7.6% in 1998.

Though recent snowstorms could slow construction, the economic expansion and election-year largesse by politicians could cause spending to keep growing, analysts said. "The repaving of America is starting, and probably none too soon," said Joel L. Naroff, president of Naroff Economic Advisors Inc. in Holland, Pa.

Spending on schools and public colleges rose 1.5%, to a record annual rate of $37.3 billion, and was up 17% from the previous December.

Though borrowing costs rose, residential construction spending increased 1.5%, to a $330.5 billion rate in December, and grew 9.3% for the year. The housing gain was paced by a 2.7% increase in the rate of single-family home construction, to a record $222.2 billion rate.

Spending on multifamily home construction increased 6.1% during the month to a $29.5 billion rate, the highest since December 1986, a Commerce Department spokesman said. Nonresidential commercial projects, such as office buildings and private schools, fell 0.3%.

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