U.S. construction spending unexpectedly fell in January as the biggest drop in public outlays since 2002 offset gains in investment in private projects, pointing to moderate economic growth in the first quarter.
The Commerce Department said on Wednesday that construction spending declined 1.0 percent to $1.18 trillion. Construction spending in December was revised to show a 0.1 percent increase rather than the previously reported 0.2 percent decline.
Economists polled by Reuters had forecast construction spending gaining 0.6 percent in January. Construction spending increased 3.1 percent from a year ago.
In January, public construction spending tumbled 5.0
In January, public construction spending tumbled 5.0 percent, the largest drop since March 2002. That followed a 1.4 percent decline in December. Public construction spending has now decreased for three straight months.
Outlays on state and local government construction projects dropped 4.8 percent, also the biggest drop since March 2002.
Spending on state and local government construction projects has
Spending on state and local government construction projects has dropped for three straight months. Federal government construction spending plummeted 7.4 percent, the largest decline since May 2014. The drop snapped three consecutive months of gains.
Spending on private construction projects rose 0.2 percent in January, advancing for a fourth straight month. Spending on residential construction projects increased 0.5 percent to the highest level since August 2007.
Investment in private nonresidential structures was unchanged in January after two straight monthly increases.
U.S. Manufacturing in February
Economic activity in the manufacturing sector expanded in February, according to The Institute for Supply Management on Wednesday, and the overall economy grew for the 93rd consecutive month.
The U.S. manufacturing index hit 57.7 in February. Analysts polled by Thomson Reuters expected the U.S. manufacturing index to hit 56 in February.
A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
The new orders index hit 65.1 percent, an increase of 4.7 percentage points from the previous month. The production index hit 62.9 percent. That’s 1.5 percentage points higher than January. Also to note, of the 18 manufacturing industries, 17 reported growth in the month.
“Comments from the panel largely indicate strong sales and demand, and reflect a positive view of business conditions with a watchful eye on commodities and the potential for inflation,” Bradley Holcomb, chair of the Institute for Supply Management, said in the report.
—CNBC’s Berkeley Lovelace contributed to this report by Reuters