Construction Spending Falls to Start the Year

Construction spending dropped last month for the first time in months, though it wasn’t the housing sector that brought it down.
According to the Commerce Department, U.S. construction spending fell 0.1 percent a seasonally adjusted annual rate of $827.0 billion in January to mark its first decline since July.
construction hat sitting on a postExperts had expected to see an increase.
It was nonresidential construction that brought the numbers down, as spending last month fell 1.5 percent to a seasonally adjusted annual rate of $285 billion. The drop was due to a sharp decline in the construction of such things as hotels and factories. Government spending was also down.
Spending on residential construction, however, rose 1.8 percent in January to a seasonally adjusted annual rate of $253.6 billion to reach its highest level in a year. The increase was due to a 2.5 percent hike in the construction of new single-family homes.
The overall drop in construction spending last month comes after a 1.4 percent increase in December and a 1.9 percent hike in November. It’s also 7.1 percent above the rate in January 2011.
But despite those gains, the pace on construction spending is more than 30 percent below the peak reached during the housing boom and less than 9 percent off the post-recession low.
But the year is young.