Construction Falls Less Than Estimates, ISM Manufacturing Expands, ISM Prices Paid Declines Again

- Construction Spending for November fell -.2% versus estimates of a -.5% decline and an upwardly revised -.3% decline in October.
- ISM Manufacturing for December rose to 51.4 versus estimates of 50.0 and a reading of 49.5 in November.
- ISM Prices Paid for December fell to 47.5 versus estimates of 54.0 and a reading of 53.5 in November.

BOTTOM LINE: Construction spending in the US fell for a third straight month in November, but less than analysts had expected and the prior month was revised higher. Spending on private residential building fell 1.6%. Construction of offices, warehouses, hospitals and schools is cushioning the slowdown in homebuilding. Total non-residential construction rose 14.7% from year-ago levels. While the worst of the housing slowdown is very likely over, homebuilders will continue to pare down inventories which will mute overall construction spending through at least the first half of this year.

Manufacturing in the US unexpectedly expanded in December, Bloomberg reported. A reading above 50.0 signifies expansion. Resilient consumer spending and continued growth in exports has resulted in lower inventories, helping stabilize factory production. The Employment Component of the index rose to 49.7 versus 49.2 the prior month. The New Orders Component of the index rose to 52.1 versus 48.7 the prior month. The Inventory Component fell to 48.4 versus 49.7 the prior month. Manufacturing will likely improve slowly during the first half of the year as auto production cutbacks and housing inventories continue to subside.