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US construction spending drops 0.6 percent in December

A construction crew works on Feb. 20 on an already sold new home in Dallas. U.S. construction spending edged down by 0.6 percent in December. The biggest declines in residential construction and government projects. Even with the setback, construction spending for all of 2018 rose to a new record, although the annual increase was the smallest seen in seven years.  (AP Photo/LM Otero, File)

A construction crew works on Feb. 20 on an already sold new home in Dallas. U.S. construction spending edged down by 0.6 percent in December. The biggest declines in residential construction and government projects. Even with the setback, construction spending for all of 2018 rose to a new record, although the annual increase was the smallest seen in seven years. (AP Photo/LM Otero, File)

By MARTIN CRUTSINGER, AP Economics Writer

WASHINGTON (AP) — U.S. construction spending edged down 0.6 percent in December, showing declines for residential construction and government projects.  But even with the setback in December, construction spending for all of 2018 reached record levels, although it was the smallest increase seen in seven years.

The decline in December followed a 0.8 percent rise in November, the Commerce Department reported on Monday. The value of residential construction fell by 1.4 percent, revealing continuing struggles in the housing sector. Nonresidential spending rose by 0.4 percent, and spending on government projects fell by 0.6 percent.

For the year, construction spending rose by 4.1 percent to $1.3 trillion. It was an all-time high, but the 4.1 percent gain was the weakest performance seen since spending fell by 2.6 percent in 2011.

Construction spending had hit a previous record high of $1.16 trillion in 2006, the peak of a housing boom that would begin declining in 2007, helping to trigger a deep recession and five-year retreat in construction spending.

Beginning in 2012, construction activity started rising again and, in 2016, surpassed the peak seen in 2006. After double-digit gains of 11 percent in 2014 and 10.7 percent in 2015, spending increases have slowed in the past three years.

The drop in residential activity in December was the result of a 3.2 percent fall in spending on single-family construction, which was partially offset by a 3.1 percent rise in spending on apartment construction.

The 0.4 percent increase in nonresidential construction was the result of a solid 1 percent gain in spending on hotel and motel construction, but a flat reading for office construction and a 1 percent drop in spending in the category that includes shopping centers.

The 0.6 percent fall in public-construction spending came after a sharp 2.2 percent drop in spending by the federal government and a 0.5 percent fall in construction spending at the state and local levels.

The December report for construction spending was one of a number of government reports that have been delayed because the 35-day partial government shutdown.

Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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