WASHINGTON — U.S. construction spending edged down 0.6 per cent in December with declines in residential construction and government projects.
Even with the December setback, construction spending for all of 2018 reached record levels, though it was the smallest increase seven years.
The December decline followed a 0.8 per cent rise in November, the Commerce Department reported. Residential construction fell by 1.4 per cent, revealing ongoing struggles in the housing sector. Nonresidential activity rose 0.4 per cent, while spending on government projects fell 0.6 per cent, with both federal and state and local activity falling.
For the year, construction spending rose 4.1 per cent to $1.3 trillion. It was an all-time high, but the 4.1 per cent gain was the weakest performance since spending fell 2.6 per cent in 2011.
Construction spending had hit a previous record high of $1.16 trillion in 2006, the peak of a housing boom that would begin declining in 2007, helping to trigger a deep recession and five-year retreat in construction spending.
Beginning in 2012, construction activity started rising again and in 2016 surpassed the 2006 high. After double-digit gains of 11 per cent in 2014 and 10.7 per cent in 2015, spending increases have slowed in the past three years.
The drop in residential activity in December reflected a 3.2 per cent fall in single-family construction which was partially offset by a 3.1 per cent rise in apartment construction.
The 0.4 per cent increase in nonresidential construction reflected a solid 1 per cent gain in hotel and motel construction, but a flat reading for office construction and a 1 per cent drop in the category that includes shopping centres.
The 0.6 per cent fall in public construction echoed a sharp 2.2 per cent drop in spending by the federal government and a 0.5 per cent fall in construction spending at the state and local levels.
The December construction spending report was one of a number of government reports that have been delayed because the 35-day partial government shutdown.