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With spending on both private and public construction showing notable decreases in the month of December, the Commerce Department released a report on Monday showing that total construction spending for the month fell by much more than economists had been anticipating.
The report showed that construction spending fell by 1.2 percent to an annual rate of $902.5 billion in December from the revised November estimate of $913.2 billion. Economists had been expecting a much more modest drop in spending of about 0.5 percent.
Spending on new construction decreased for the second consecutive month following a revised 1.2 percent drop in November and is now down 9.9 percent compared to the same month a year ago.
While the 0.5 percent drop in spending in October was revised to a 1.5 percent increase, Paul Dales, U.S. Economist at Capital Economics, said, "The net effect is that fourth-quarter construction spending was weaker than previously looked likely."
"This may prompt a modest downward revision to fourth-quarter GDP." he added.
The continued decrease in spending in December was partly due to a 1.2 percent drop in spending on private construction, with a 2.8 percent drop in spending on residential construction more than offsetting a 0.2 percent increase in spending on non-residential construction.
Public construction spending also fell by 1.2 percent in December, as spending on highway construction fell by 2.3 percent and spending on educational construction slipped by 0.4 percent.
For the full year, the Commerce Department noted that the value of construction was $939.1 billion in 2009, down 12.4 percent from $1.072 trillion in 2008.
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