Construction spending down in November

New data indicates that U.S. construction spending fell in November for the first time in eight months. While overall spending dropped 0.3 percent, investments in private nonresidential projects were down 0.7 percent, marking the fourth time the number has fallen in six months. These dropping numbers seen in November could indicate that businesses were unwilling to expand or unable to obtain business financing in the heat of the now-resolved "fiscal cliff" crisis.

Construction funding could be down for several reasons
While the debate over national spending, budget cuts and higher taxes was raging in Washington, business owners may have been hesitant to invest in their companies and invest in new locations and construction projects. Other companies interested in starting new sustainable energy projects at their current offices may have been deterred from such investments as the uncertainty grew. Higher taxes and potentially limited government contracts could have made it impossible for entrepreneurs to afford new spaces or construction projects while still trying to pay their bills.

Similarly, banks that issue investment loans may have been reluctant to dole out additional financing, as the future for businesses and their finances remained unclear until a deal was recently reached in Congress. Financial institutions could have been waiting until a deal was reached to agree to fund new business construction, renovations to install renewable energy technologies and startups.

Because the government recently agreed to a solution to the fiscal cliff, a spike in such business construction projects may be seen in the coming months, as businesses could now be more comfortable expanding and banks may feel more at ease to lend for such projects. Those businesses comfortable expanding now that the fiscal crisis has been averted may seek lending options from their financial institutions in the coming weeks.

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