US construction spending expected to increase in December

Economic Indicators Associated Press

The Commerce Department reports on December U.S. construction spending Monday at 10 a.m. Eastern.

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INCREASED BUILDING: Economists expect that construction spending rose 0.6 percent in December, according to a survey by data firm FactSet. That follows a 0.3 percent decline in November.

STILTED GROWTH: Construction activity has been muted for much of 2014. Over the 12 months ended in November, spending rose just 2.4 percent to $974.9 billion. Homebuilding growth has been sluggish with so many would-be buyers priced out of the market because of meager wage growth and home prices that spiked last year.

Still, construction may have entered 2015 with newfound momentum as the broader economy continues to recover from the recession.

Sales of new home sales climbed 11.6 percent in December to a seasonally adjusted annual rate of 481,000, the Commerce Department said in a recent report. That represents a marked improvement from the total sales of 435,000 for all of 2014.

Solid job growth should spillover into construction. Employers added nearly 3 million jobs in 2014, the most since 1999. Economists surveyed by FactSet ahead of Friday's jobs report say that employers likely added 230,000 jobs in January.

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The strong hiring should lead to additional demand for hotels and office buildings, according to the American Institute of Architects' forecast for 2015. The trade group expects that construction spending will increase 7.7 percent this year on non-residential buildings, led primarily by new offices, hotels, factories and retail development projects.