U.S. construction spending unexpectedly falls in March
U.S. construction spending unexpectedly fell in March after three straight monthly gains, pulled down by declines in both private and public construction projects.
The Commerce Department said on Wednesday construction spending decreased 0.9 percent. Data for February was revised to show construction outlays rising 0.7 instead of increasing 1.0 percent as previously reported. Construction spending data for January was also revised lower to account for additional projects identified as eligible for inclusion in the series.
Economists polled by Reuters had forecast construction spending edging up 0.1 percent in March. Construction spending dropped 0.8 percent on a year-on-year basis in March.
March’s weak construction spending as well as downward revisions to January and February outlays suggest the government’s initial estimate of first-quarter gross domestic product published last week could be revised lower.
Increased state and local government spending on roads and highways helped to lift GDP growth to a 3.2 percent annualized rate in the first quarter, according to the advance estimate. The economy grew at a 2.2 percent pace in the October-December period.
In March, investment in public construction projects fell 1.3 percent after rising 3.2 percent in the prior month. Spending on state and local government construction projects dropped 1.1 percent after advancing 3.4 percent in February.
Outlays on federal government construction projects tumbled 2.7 percent after increasing 1.4 percent in February.
Spending on private construction projects dropped 0.7 percent in March to the lowest level since August 2017, after slipping 0.2 percent in the prior month. Private construction outlays have now declined for three straight months.
Investment in private residential projects plunged 1.8 percent to the lowest level since December 2016, after falling 0.4 percent in February. The housing market has struggled, with spending on homebuilding contracting for five straight quarters.
With mortgage rates declining from last year’s lofty levels, the outlook for the housing market is improving, though land and labor shortages remain a challenge.
Spending on private nonresidential structures, which includes manufacturing and power plants, rose 0.5 percent in March after climbing 0.1 percent in February.
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