Construction Spending Up in December

Construction spending shot up 2.5% in December, ending a year in which building activity registered its weakest showing since the recession year of 1982, the government said today.

The Commerce Department reported that construction spending for all of 1988 totaled $403.4 billion, up a meager 1.1% from 1987. But after taking into account inflation, spending actually was down 0.4% in 1988 from the previous year.

Construction spending had been down 5.2% in the 1982 recession, or 8.1% after adjusting for inflation.

Construction spending last year was depressed by slow activity on apartments, a category suffering from high vacancy rates and still feeling the after-effects of the 1986 tax overhaul that curtailed tax breaks for construction investments.

In inflation-adjusted dollars, apartment construction was down 13.9% to $19.3 billion last year, while work on single-family homes rose 2.9% to $103.6 billion. Non-residential construction spending was down a slight 0.1% to $78.1 billion.

Building activity rose to a seasonally adjusted annual rate of $422.7 billion in December, the fourth straight monthly rise. The 2.5% increase was the best since a 2.8% rise last March.