The widest measure of U.S. economic growth slowed in not just the final quarter of last year but for all of 2016, according to a preliminary Commerce Department report released Friday. However, that performance wasn’t so much due to weakness here at home.

The gross domestic product (GDP) increased at an annual rate of 1.9% in October through December, down from the 3.5% pace in the third quarter of 2016, and less than a 2.2% increase expected by a poll of analysts.  

The downturn reflected an acceleration in imports, a deceleration in personal spending as well as federal government spending that were partly offset by an upturn in residential fixed investment, an acceleration in private inventory investment, increased state and local government spending, and more nonresidential fixed investment, according to the department.

Also, a drop in exports during the fourth quarter was the biggest in nearly two years with trade shaving off 1.7 percentage points in fourth quarter GDP growth after it added nearly 0.9 percentage points in the third quarter.

For all of 2016 the GDP increased 1.6% compared to 2015, when it grew by 2.6% from the year before. Last year also marked its weakest annual performance since 2011.

Following a disappointing first half of 2016, domestic growth picked up momentum from June to September, according to Stifel Fixed Income Chief Economist Lindsey Piegza.

“The improvement over the summer months, however, proved short-lived as growth declined once again heading into the final quarter of the year,” she said. “Supplemented in good part by a sizable rebuilding of inventories, investment appears to have gained some ground particularly in terms of intellectual property and equipment spending, a more positive theme that could continue to carry forward especially amid a pro-growth agenda out of Washington.”

Capital Spending Increases Despite Fall in Durable Goods 

The report was released at the same time as a separate one from the Commerce Department showing new orders for manufactured durable goods fell again in December while shipments posted another gain as a measure of business investment moved higher.

New orders fell 4.8% from November, the second straight monthly drop. However, when transportation orders are excluded, which declined 2.2%, new orders increased 0.5%. Excluding defense, new orders increased 1.7%.

On a more encouraging note, new orders for nondefense capital goods excluding aircraft increased 0.8% in December, following gains of 1.5% in November and 0.5% in October. Shipments of these items rebounded 0.7% following a 0.5% November decline.

Shipments of manufactured durable goods increased 1.4% following a November gain of 0.3%, the third hike in the past four months.

While headline orders remain in negative territory, business investment appears to be gaining footing, which could be a positive indication for 2017, if said growth can be maintained, said Piegza.

“Businesses at this point are reportedly optimistic with a series of pro-growth proposals from the Trump administration focused on reducing the cost and regulatory burden on consumers and businesses,” she said. “The more recent agenda, however, of the White House on stricter trade agreements and potentially introducing large tariffs or taxes on exports into the U.S. could more than offset the gains from other areas of tax and regulatory relief.”

New Home Sales Fell in December Despite Better 2016

This follows reports from the day before showing sales of new homes tumbled in December while a measure of overall expected economic conditions showed a healthy improvement.

Sales of new single-family homes fell 10.4% in the final month of 2016 to a seasonally adjusted annual rate of 536,000, according to the Commerce Department. That marks the biggest one-month drop since March 2015 and is much larger than a consensus estimate from economists.

Despite this, sales for all of last year rose 12.2 from 2015 to 563,000 units, the highest annual rate since 2007 and the fifth straight year of growth. This compares to the early 2000s and before the Great Recession, when new home sales were more than 1 million annually for consecutive years.

“We are encouraged by the growth in the housing sector last year, and by the fact that builders increased inventory by 10% in anticipation of future business,” said Robert Dietz, chief economist of the National Association of Home Builders. “NAHB’s forecast calls for continued upward momentum this year, with housing starts expected to rise 10 percent over the course of 2017.”

Some analysts are blaming the monthly downturn to the natural volatility of the home-building market, especially during the winter months, as well as rising prices for cutting into demand.

Regionally, new home sales increased 48.4% in the Northeast. Sales fell 1.3% in the West, 12.6% in the South and 41% in the Midwest.

Economic Indicators of What’s To Come Remain Good

Meantime, a measure of economic conditions three to six months in the future showed continued strengthening.

The Leading Economic Index for the U.S. from the private research group The Conference Board increased 0.5% in December, following a 0.1% increase in November and a 0.2% increase in October. The latest reading met a consensus estimate from Wall Street analysts.

“The U.S. Leading Economic Index increased in December, suggesting the economy will continue growing at a moderate pace, perhaps even accelerating slightly in the early months of this year,” said Ataman Ozyildirim, director of business cycles and growth research at The Conference Board. “December’s large gain was mainly driven by improving sentiment about the outlook and suggests the business cycle still showed strong momentum in the final months of 2016.”

This follows a report from Wednesday showing sales of existing homes in the U.S. declined in December while moving higher for all of last year as the nation’s manufacturing sector began 2017 on a strong note.