FILE- In this March 8, 2019, file photo, work continues on an outdoor observation deck on the 30 Hudson Yards office building in New York. On Monday, April 1, the Commerce Department reports on U.S. construction spending in February. (AP Photo/Mark Lennihan, File)

WASHINGTON (AP) — U.S. construction spending rose a solid 1 percent in February, led by a strong gain in spending on government projects, which hit an all-time high.

The February increase followed an even larger 2.5 percent gain in January and a slight 0.2 percent rise in December, the Commerce Department reported Monday. The gains pushed total construction to a seasonally adjusted annual rate of $1.32 trillion, the highest level since May.

Residential construction was up 0.7 percent. Government construction jumped 3.8 percent to $303 billion, the highest level on record.

Weakness in home building has been a drag on overall growth, but analysts believe housing construction should rebound this year, helped by lower mortgage rates following the signal by the Federal Reserve that it plans to hold rates steady this year.

Spending on private nonresidential projects dropped 0.5 percent in February, with office construction down 0.4 percent and the sector that includes shopping centers falling 0.8 percent. Spending on hotel and motel construction managed a small 0.1 percent gain.

The big increase in spending on government projects was led by an increase of 3.8 percent in state and local construction projects.

For all of 2018, construction spending rose 3.9 percent to a record high of $1.29 trillion. It marked the seventh annual increase after construction had fallen for five straight years starting in 2007 with the collapse of the housing bubble.

Survey: US manufacturing activity increased in March

WASHINGTON (AP) — U.S. manufacturers grew at a faster pace in March, as the pace of employment jumped and new orders and production improved.

The Institute for Supply Management, an association of purchasing managers, said Monday that its manufacturing index rose to 55.3 last month, up from 54.2 in February. Readings above 50 point toward an expansion in manufacturing. The sector has been reporting growth for 31 months.

ISM’s survey of companies for the index is a sign that economic growth should continue, even though the global economy, steel tariffs and the trade battle between the United States and China have been sources of concern.

“The primary driver here was employment,” said Timothy Fiore, chair of the ISM manufacturing business survey committee. “People are hiring to make sure they have the outputs needed to meet the demand in April, May and June.”

The employment component of the index surged 5.2 percentage points, while new orders registered a 1.9-point gain and production notched a 1-point increase.

Out of the 18 sectors surveyed for the report, 16 reported growth, including transportation equipment and primary metals. Only the apparel and paper product sectors reported declines. The food and beverage sector performed the strongest in March.