The overall economy grew at a 3 percent annual rate in the third quarter, even though residential construction was down for the second straight quarter.

WASHINGTON (AP) — U.S. construction spending increased 0.3 percent in September as the biggest advance in government building activity in four months offset weakness in other areas.

The Commerce Department said Nov. 1 that the September gain followed a tiny 0.1 percent rise in August and declines in June and July.

Despite a slump in homebuilding this year, economists remain optimistic that the low level of unemployment will soon spark a rebound in sales and construction. The overall economy grew at a 3 percent annual rate in the third quarter, even though residential construction was down for the second straight quarter.

All of the strength in this report came from a 2.6 percent increase in government construction with state and local activity up 2.5 percent and federal spending up 3.4 percent.

Residential housing showed no increase, while non-residential construction dropped 0.8 percent, its fourth straight monthly decline.

Overall spending was $1.22 trillion at a seasonally adjusted annual rate, a gain of 2 percent from a year ago.

In the non-residential area, office construction was down 1.1 percent and the category that includes shopping centers was down 1 percent.

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