US construction spending hit 8-year-high in 2015

WASHINGTON – U.S. construction spending rebounded slightly in December, helping push total spending for 2015 to the highest level in eight years.

Construction spending increased 0.1 per cent in December after falling in October and November, the Commerce Department said Monday.

The December increase was driven by gains in home construction and spending on government projects. That offset declines in spending on private construction of shopping centres, office buildings and hotels.

For all of 2015, construction jumped 10.5 per cent to $1.1 trillion, the highest total since 2007.

A home construction boom peaked in 2006 before falling for the next five years. Construction spending has been climbing since 2012. Economists believe building activity, fueled by home construction, will bolster the overall economy this year.

Home construction was a bright spot in the fourth quarter, growing at an annual rate of 8.1 per cent in the October-December period. That was one of the best showings for any major category.

The overall economy, as measured by the gross domestic product, grew at a meagre annual rate of 0.7 per cent in the fourth quarter. Economists are looking for stronger growth of around 2.5 per cent in the current January-March period.

For December, home construction advanced 0.9 per cent, while non-residential construction fell 2.1 per cent. Spending on state and local government projects was up 2.3 per cent, but spending on federal building projects fell 3.3 per cent.

For all of 2015, home construction rose 12.6 per cent, while private non-residential activity was up 12 per cent. This sector was strong for most of the year, but it has declined in three of the past four months. Spending on state and local building projects rose 6.1 per cent in 2015, while spending on federal projects was up a smaller 0.7 per cent.