U.S. construction spending surged 1.4% in October, the best gain in five months, with all major categories of building posting gains.

The October spending increase was the third monthly gain after more modest advances of 0.3% in September and 0.5% in August, the Commerce Department said Friday.

Home building was up 0.4%, with strength in single-family construction offsetting a drop in apartment building. Non-residential construction rose 0.9% after four straight declines. Spending on government projects jumped 3.9%, the biggest one-month gain in three years, with spending at the federal, state and local levels all showing increases.

Though home building has been weak for much of the year, economists expect such construction to rebound as a strong job market boosts sales in coming months.

The overall economy grew at a healthy annual rate of 3.3% in the July-September quarter, the best showing in three years, even though residential construction declined for a second straight quarter. But economists remain optimistic that the low level of unemployment4.1% in Octoberwill spark a sustained rebound in sales and construction.

The strength in October was evident in all major sectors of construction. The rise in housing construction reflected a 0.3% gain in single-family homes, which offset a 1.6% drop in the smaller apartment category.

In the non-residential area, office building was up a strong 4.4%, and hotel construction rose 2.3%. Those gains offset a 1.9% fall in the category that covers shopping centres.

In government categories, spending at the state and local level rose 3.3%, while spending on federal projects jumped 11.1%.

U.S. factory growth

American factories grew more slowly in November but still appear healthy.

The Institute for Supply Management says its manufacturing index slipped to 58.2 last month from 58.7 in October. Anything above 50 signals that U.S. factories are expanding. American manufacturing is on a 15-month winning streak.

New orders and production grew faster in November. Hiring and new export orders grew but at a slower pace.

The ISM, a trade association of purchasing managers, said 14 of 18 manufacturing industries expanded in November, led by paper and machinery makers.

U.S. industry has benefited from an improving global economy and from a fall in the dollar, which makes U.S. products less expensive in foreign markets.

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