US construction spending posts first drop since June

[WASHINGTON] US construction spending unexpectedly fell in December, posting its first drop since June, as investment in both private and public projects declined.

The Commerce Department said on Monday construction spending decreased 0.2 per cent. Data for November was revised up to show construction outlays rising 0.7 per cent instead of increasing 0.6 per cent as previously reported.

Economists polled by Reuters had forecast construction spending gaining 0.5 per cent in December. Construction spending increased 5.0 per cent on a year-on-year basis in December.

For all of 2019, construction spending fell 0.3 per cent, the first annual decline since 2011, after rising 3.3 per cent in 2018.

In December, spending on private construction projects slipped 0.1 per cent after increasing 0.6 per cent in November. It was pulled down by a 1.8 per cent tumble in spending on nonresidential structures, which includes manufacturing plant and mining exploration, shafts and wells, to the lowest level since Nov 2018.

Spending on nonresidential structures fell 0.5 per cent in November. The government in its fourth-quarter GDP report last week said spending on non-residential structures contracted in 2019 by the most since 2016. Outlays on private nonresidential structures have been depressed by a manufacturing downturn due to trade tensions and cheaper energy products.

Spending on homebuilding increased 1.4 per cent after surging 1.5 per cent in November. Residential construction is being supported by lower mortgage rates. Residential investment increased solidly in the second half of 2019, after contracting for six straight quarters, the longest such stretch since the recession.

Investment in public construction projects dropped 0.4 per cent in December after rebounding 1.0 per cent in November. Spending on state and local government construction projects fell 0.6 per cent after rising 0.9 per cent in November. Outlays on federal government construction projects surged 2.1 per cent in December to the highest level since December 2012. That followed a 1.7 per cent advance in November. 

REUTERS