US construction spending dips 0.2% in December
WASHINGTON (AP) — Spending on US construction projects edged down a slight 0.2% in December (2019), closing out a year when total construction registered its first annual decline in eight years.
The US Department of Commerce said yesterday that the decline was the first monthly drop since a 0.9 per cent fall in June. For the year, construction spending fell 0.3 per cent, the first setback since a 2.6 per cent decrease in 2011.
The fall-off reflects weakness in non-residential construction, which fell 1.8 per cent, the sharpest setback drop since April. Spending for most major categories, from office building to shopping centres, declined.
Home building rose a solid 1.4 per cent. This category continues to benefit from falling mortgage rates and a strong labour market.
Spending by the federal government on construction projects rose a sharp 2.1% in December to the highest level in seven years, but this was offset by a 0.6 per cent drop in the larger state and local government category.
The 0.3 per cent drop in construction spending for 2019 followed eight straight years of gains and left total spending at US$1.3 trillion in 2019, down from US$1.31 trillion in 2018, a year when spending had risen 3.3 per cent.
It was the first annual setback since a period of five-straight yearly declines from 2007 through 2011, as the construction industry was battered by a deep recession that had been triggered by the bursting of a housing boom bubble in the middle of the last decade.
For last year, home building was down 4.7 per cent while non-residential construction was basically flat and public construction posted a 7.1 per cent increase.
Economists believe home building will show further gains this year, helped by the Federal Reserve’s decision to cut interest rates three times last year in an effort to protect the US economy from a global slowdown and the adverse effects of a US-China trade war.
The 1.4 per cent gain in residential construction in December reflected a 2.7 per cent jump in construction of single-family homes which offset a 1.8 per cent drop in the smaller and more volatile apartment sector.