WASHINGTON (Reuters) - U.S. construction spending unexpectedly fell in December as investment in private projects rose marginally and public outlays tumbled, which could have an impact on the economic growth estimate for the fourth quarter.

The Commerce Department said on Wednesday that construction spending slipped 0.2 percent to $1.18 trillion. Construction spending in November increased by an unrevised 0.9 percent.

Economists polled by Reuters had forecast construction spending gaining 0.2 percent in December.

Construction spending increased 4.5 percent in 2016 after surging 10.6 percent in 2015.


December's drop in construction spending could have implications on the fourth-quarter gross domestic product estimate. The government reported last week that GDP increased at a 1.9 percent annualized rate in the fourth quarter after accelerating at a 3.5 percent pace in the July-September period.

Investment in private nonresidential structures -- which include factories, hospitals and roads -- declined at a 5.0 percent rate in the fourth quarter after rising at a 12.0 percent pace in the prior period.

In December, spending on private construction projects gained 0.2 percent, reaching its highest level since July 2006.

It was boosted by 0.5 percent increase in spending on residential projects.

Investment in private nonresidential structures was unchanged after shooting up 0.8 percent the prior month.

Public construction spending dropped 1.7 percent in December. The drop, which was the largest since July, followed four straight monthly increase.

Outlays on state and local government construction projects declined 2.4 percent, also snapping fourth straight months of increases. Federal government construction spending jumped 6.1 percent to the highest level since October 2015.

It was the third straight month of gains in federal government spending on construction projects.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

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