US construction spending retreats in February

WASHINGTON – U.S. construction spending fell in February by the largest amount in three months. Weakness in nonresidential construction and government offset the strongest month for home construction in more than eight years.

Construction spending fell 0.5 per cent in February following a 2.1 per cent January gain, the Commerce Department reported Friday. Spending declines on construction of factories, communication facilities and other nonresidential activities fell by 1.3 per cent in February. Sending on government projects was down 1.7 per cent.

Those declines overshadowed a solid 0.9 per cent rise in home construction, which pushed that sector to the highest point since October 2007.

Home construction has been a bright spot for the economy, growing at a sizzling 10.1 per cent rate in the fourth quarter. Analysts are forecasting housing will remain strong this year.

The economy rose at a moderate rate of 1.4 per cent in the October-December quarter. Many economists believe overall growth accelerated only slightly in the January-March period, although they expect growth to accelerate as the year progresses.

The dip in activity in February left construction spending at a seasonally adjusted annual rate of $1.14 trillion.

Government building activity dropped 1.7 per cent, with spending by state and local governments declining 1.8 per cent while federal construction spending was unchanged.

Construction activity for all of 2015 showed a 10.6 per cent increase to $1.1 trillion, the highest annual level for spending since 2007.

A home construction boom peaked in 2006. But after the housing bubble burst, construction activity fell for the next five years. Construction spending has been rising since 2012.