U.S. construction spending increased more than expected in December as investment in private construction projects rose to a record high and federal government outlays rebounded strongly.

The Commerce Department said on Thursday construction spending rose 0.7 percent to an all-time high of $1.25 trillion. November's construction outlays were revised down to show a 0.6 percent increase instead of the previously reported 0.8 percent advance.

Economists polled by Reuters had forecast construction spending increasing 0.4 percent in December. Construction spending advanced 2.6 percent on a year-on-year basis. It increased 3.8 percent in 2017, the smallest gain since 2011, after rising 6.5 percent in 2016.

In December, spending on private construction projects rose 0.8 percent to a record high of $963.2 billion after increasing 0.7 percent in November. Outlays on private residential projects gained 0.5 percent to the highest level since March 2007 after surging 1.1 percent in November.

Spending on nonresidential structures jumped 1.1 percent in December after climbing 0.3 percent in the prior month.

The government reported last week that spending on nonresidential structures such as oil and gas well drilling rebounded in the fourth quarter after slumping in the third quarter. The economy grew at a 2.6 percent annualized rate in the final three months of 2017, slowing from the third quarter's brisk 3.2 percent rate.

Outlays on public construction projects rose 0.3 percent in December after edging up 0.1 percent in November. Spending on federal government construction projects jumped 10.9 percent, the largest increase since October 2014. State and local government construction outlays fell 0.6 percent.