Builder spending at 10-year high

Home, business, government projects gained in November

Workers pour concrete last month at the Patricia and Phillip Frost Museum of Science under construction in Miami. U.S. constructionproject spending rose 0.9 percent in November, the Commerce Department said Tuesday.
Workers pour concrete last month at the Patricia and Phillip Frost Museum of Science under construction in Miami. U.S. constructionproject spending rose 0.9 percent in November, the Commerce Department said Tuesday.

WASHINGTON -- U.S. builders increased their spending on construction projects for a second-straight month in November, pushing activity to the highest level in more than a decade.

Construction spending rose 0.9 percent in November after a 0.6 percent increase in October, the Commerce Department reported Tuesday. The increase reflected solid gains in home construction, nonresidential building and government construction activity.

The gains in all three categories pushed total construction to a seasonally adjusted annual rate of $1.18 trillion, the highest point since April 2006, when a housing boom fueled building.

Economists believe that construction will continue to show gains in 2017, reflecting a strong job market with unemployment at the lowest point in nine years.

Financial markets sent stock prices to record highs after the election of Donald Trump, reflecting in part enthusiasm over his vows to increase spending on projects to repair and replace the country's aging infrastructure.

For November, a 1 percent rise in residential construction reflected a 1.8 percent rise in single-family construction, which offset a 2.7 percent drop in the smaller and more volatile apartment construction sector.

A 1 percent rise in nonresidential construction followed a 1.6 percent decline in October. The gains in November were led by a 7 percent jump in hotel and motel construction.

A 0.8 percent advance in government projects reflected a 3.1 percent rise in spending at the federal level and a 0.6 percent increase in construction by state and local governments.

President Barack Obama sought for a number of years to get Congress to approve higher infrastructure spending, but he was blocked by opposition from Republicans who said the projects would increase budget deficits. Democrats in Congress have already expressed support for Trump's proposals to increase construction spending. His ideas, however, may still face opposition from Republicans worried about high deficits.

U.S. manufacturing activity expanded in December to its highest level in two years, as new orders and production jumped in a positive sign for economic growth.

The Institute for Supply Management said Tuesday that its manufacturing index came in at 54.7 last month, up from 53.2 in November and the highest reading since the end of 2014. Any reading over 50 signals growth.

"This morning's report indicates that U.S. manufacturing activity ended 2016 on a high note," said Rob Martin, an economist at Barclays bank.

U.S. factories are steadily rebounding from a rough patch hit in late 2015 and early 2016. A decline in energy prices caused cutbacks in orders for equipment and pipelines, while a stronger dollar and slower economic growth abroad hurt exports.

The Institute for Supply Management's manufacturing index has topped 50 for nine of the past 10 months.

New orders registered a reading of 60.2 and production improved to 60.3, evidence of greater demand for factory goods. The employment reading was a weaker but still expanding 53.1.

Of the 18 industries tracked by the report, 11 reported growth in December, including machinery, primary metals and petroleum and coal products.

Other indicators show a tepid rebound for manufacturers thus far.

Factory output increased 0.1 percent during the 12 months that ended in November, according to the Federal Reserve.

Manufacturers have responded by trimming their payrolls. The number of factory jobs fell 77,000 over the past year, according to the Labor Department.

But there are signs that factory activity could pick up steam.

Orders for industrial machinery, steel and other big-ticket goods rose in November, according to a Commerce Department report last month.

That report showed that business investment in capital goods that are generally linked to stronger economic growth rose 0.9 percent in November, after a slight 0.2 percent rise in October. Those gains follow a 1.5 percent drop in September.

Information for this article was contributed by Martin Crutsinger and Josh Boak of The Associated Press.

Business on 01/04/2017

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