WASHINGTON (AP) — U.S. construction spending accelerated in December as building activity increased for new houses and government-backed highways.
The Commerce Department said Monday that construction spending rose 0.4 percent in December. Total construction spending in 2014 increased 5.6 percent to $961 billion, with the gains slightly below the pace of 5.7 percent in 2013.
Spending on single-family houses rose 1.2 percent in December from the prior month. Highway and street construction grew by 2.1 percent and factory-building by 1.9 percent. Construction of schools and commercial centers fell in December.
The gains were strong enough that Michael Gapen, an analyst at the bank Barclays, said that the economy likely expanded at an annual pace of 2.8 percent in the final three months of last year, compared to the 2.6 percent estimate reported by the government last week.
Over the course of 2014, spending on offices, power plants, factories and lodgings climbed significantly, potentially signaling broader economic growth in 2015 that could further boost residential construction.
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.
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.