US construction spending unexpectedly drops in March
US construction spending unexpectedly fell in March, according to data released by the Commerce Department on Tuesday.
Spending fell 1.7% to a seasonally-adjusted annual rate of $1.28bn, missing expectations for a 0.5% increase. On the year, spending was up 3.6% to $1.24bn.
Private sector construction spending dropped by 2.1% to a seasonally-adjusted annual rate of $987.5bn, marking the biggest drop since January 2011.
Meanwhile spending on residential construction declined 3.5% to $536.8bn and non-residential construction spending slipped 0.4% to $450.7bn.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "This looks bad but it probably didn't happen; the first - and sometimes second - estimates of monthly construction spending are hopelessly unreliable.
"Spending for January and Feb was revised up by a huge 2.6%, so the net number today is a bit stronger than expected. First-quarter construction rose at an unsustainable 13.7% annualised rate, boosted by a 37% surge in home improvement spending, which captures the repair work after the hurricanes last summer.
"New housing construction rose at an 8.8% rate, while private non-residential activity jumped 10.0%. Public sector spending rose at a 10.9% rate, with almost all the increase in the tiny federal government component; that likely will reverse. More immediately, note that these data were a bit weaker than the BEA assumed when compiling Q1 GDP, and they'll subtract 0.1 percentage points at the first revision."