Spending on construction projects increased 0.8 percent in October due to a surge in federal, state and local government outlays. Private homebuilding decreased 0.6 percent, the third decrease in the last four months.

Construction spending increased at an annual rate of 0.8 percent from September to October, seasonally adjusted, powered by a public spending surge that offset a decline in the private sector.

The federal government boosted outlays by 10.9 percent in October, the largest monthly gain since January 2011, and state and local governments, which fund the majority of public construction, increased spending by 3.2 percent. The federal spending increase in October, the first month of the new fiscal year, reversed the declines of the prior two months. Federal construction spending had been weak most of the year due to across-the-board cuts put in place in March.

Private homebuilding, in contrast, declined 0.6 percent, the third decrease in the last four months despite strength in private construction earlier in the year. Private building is up 8.8 percent through the first 10 months of 2013 compared to the same period last year. Single-family home builds have increased nearly 30 percent during that time.

Public construction is down 2.8 percent year-to-date, due to declines in spending on government offices, schools and public safety.

Construction spending fell 0.3 percent in September, seasonally adjusted, marking the first overall monthly decrease since March. September and October figures were released simultaneously due to delays caused by the government shutdown.