WASHINGTON(Reuters) – U.S. 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%. Data for November was revised up to show construction outlays rising 0.7% instead of increasing 0.6% as previously reported.
Economists polled by Reuters had forecast construction spending gaining 0.5% in December. Construction spending increased 5.0% on a year-on-year basis in December.
For all of 2019, construction spending fell 0.3%, the first annual decline since 2011, after rising 3.3% in 2018.
In December, spending on private construction projects slipped 0.1% after increasing 0.6% in November. It was pulled down by a 1.8% tumble in spending on nonresidential structures, which includes manufacturing plant and mining exploration, shafts and wells, to the lowest level since November 2018.
Spending on nonresidential structures fell 0.5% in November. The government in its fourth-quarter GDP report last week said spending on nonresidential 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% after surging 1.5% 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% in December after rebounding 1.0% in November. Spending on state and local government construction projects fell 0.6% after rising 0.9% in November. Outlays on federal government construction projects surged 2.1% in December to the highest level since December 2012. That followed a 1.7% advance in November.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)