U.S. construction spending grows strongly in December

Construction spending in the U.S. expands strongly in December. Construction on spending grew 0.7 percent sequentially, coming in above consensus expectations of 0.4 percent. The prior months’ data were downwardly revised. Construction spending in November was revised down by two-tenths, to 0.6 percent, while October data were downwardly revised more significantly. Overall, today’s report implies that the momentum in construction spending picked up only toward the end of the quarter, noted Barclays in a research report.

Delving into details, construction spending was driven by private construction that rose 0.8 percent, which in turn was driven by the non-residential category. Private residential construction spending grew by a more modest 0.5 percent. Public construction spending grew 0.3 percent, also led by the non-residential category.

In all, construction spending in December was slightly more solid than expectations. But, most of this upside surprise was countered by downward revisions to prior months’ data. Data on public construction spending imply a lower contribution from government spending to the fourth quarter GDP.

“On the other hand, data on private construction spending were stronger than we had penciled in, implying higher residential investment in Q4. These two effects fully offset each other, leaving our Q4 GDP tracking estimate unchanged at 2.6% q/q saar after rounding”, added Barclays.

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