U.S. construction spending unexpectedly fell in December to touch its lowest level in nearly 10-1/2 years as investment in both public and private projects declined, suggesting the sector would continue to struggle this year as federal stimulus spending tapers off.
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The Commerce Department said on Tuesday construction spending dropped 2.5% to an annual rate of $787.9 billion, the lowest level since July 2000. The government revised November's data to show a 0.2% fall, which was previously reported as a 0.4% increase.
Economists polled by Reuters had forecast construction spending flat in December. For the whole of 2010, construction spending declined 10.3% to $814.2 billion, also the lowest since 2000.
Spending in December was weighed down by a 2.8% fall in investment in public projects, which reflected an 11.6% drop in federal construction projects. State and local government spending on construction projects fell 1.8% in December.
Investment in private construction dropped 2.2% in December, ending three straight months of gains. Spending on private home building tumbled 4.1%, with private nonresidential outlays dipping 0.5%.
Home building and the construction of structures were minor contributions to fourth-quarter gross domestic product growth.