US: Construction spending for 2019 was the weakest since 2011– Wells Fargo

 In the US, construction spending dropped 0.2% in December. Analysts at Wells Fargo point out the solid gain in residential spending was not enough to offset a drop in nonresidential. They noted overall spending for 2019 was 0.3% below 2018 levels, the weakest outcome since 2011.

Key Quotes: 

“Construction outlays ended a five-month string of gains and fell 0.2% during December. Overall, spending continues to be somewhat subdued relative to recent history, as an ongoing shortfall of qualified workers has pushed labor costs steadily higher and delayed or sidelined many projects. On a full-year basis, total spending for 2019 was 0.3% below 2018 levels, which marks the weakest outcome since 2011.”

“The fundamentals appear to be improving, however, and there are a number of encouraging developments pointing to better days ahead for construction. While finding labor remains a challenge, lower builder material prices and lower interest rates should produce a friendlier environment for construction in 2020.”

“The residential sector has already begun to benefit. Alongside reduced mortgage rates and still-low lumber prices, residential spending advanced 1.4% in December, and is up 15.0% on a three-month annualized basis.”

“Public expenditures were the clear standout during 2019, with total spending rising 7.1% compared to 2018, the strongest gain since 2007.”