U.S. construction spending unexpectedly fell in February and the prior month’s outlays were revised to show a steeper decline than previously estimated, which could see economists further mark down their first-quarter growth forecasts.
Construction spending dipped 0.1 percent to an annual rate of $967.2 billion, the Commerce Department said on Wednesday. January’s outlays were revised to show a 1.7 percent decline instead of the previously reported 1.1 percent drop.
Economists polled by Reuters had forecast construction spending being flat in February.
Economic growth slowed markedly in the first quarter, held back by bad weather, a strong dollar, weaker overseas demand and a now-settled labor dispute at the country’s busy West Coast ports.
Estimates for first-quarter gross domestic product range between a 0.8 percent and 1.2 percent annual pace. The economy expanded at a 2.2 percent rate in the fourth quarter.
Construction spending in February was restrained by a 0.8 percent drop in public construction outlays.
Spending on federal government projects jumped 9 percent, but that was offset by a 1.6 percent plunge in state and local government outlays - the largest portion of the public sector segment.
Spending on private construction projects was up 0.2 percent as a rise in non-residential outlays made up for a decline in spending on home building.
Private residential construction spending fell 0.2 percent, likely due to the disruption from cold and snowy weather in the second half of the month.
Spending on single-family construction fell 1.4 percent, while multi-family home building rose 4.1 percent.
Reporting by Lucia Mutikani; Editing by Paul Simao Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters Messaging: firstname.lastname@example.org