The latest figures on U.S. construction spending — the highest in seven years — confirm the economy is gaining momentum in the third quarter.

Construction spending in July rose an estimated 0.7%, to $1.08 trillion, up 13.7% compared with July of last year, and the highest level since May 2008, the Commerce Department said on Tuesday.

Economists polled by Reuters had forecast construction outlays would rise 0.6%.

“The report rounded off a month of solid data that suggested the economy had retained much of its strength from the second quarter, when it expanded at a 3.7% annual pace,” Reuters wrote. “July data for consumer spending, industrial production, business spending, housing, and employment painted a fairly upbeat picture of the economy.”

Private construction spending rose 1.3%, to the highest level since April 2008, Commerce said. Spending on private nonresidential construction projects rose 1.5%, to the highest level since October, 2008, while spending on private residential construction increased 1.1%, to a near 7-1/2-year high, reflecting gains in home building.

In contrast, public construction spending fell 1%. Spending on state and local government projects, the largest portion of the public sector segment, dropped 1.1%, while federal government outlays rose 0.9%.

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