WASHINGTON – U.S. construction spending barely rose in March as a moderate increase in outlays on private projects was partially offset by a further decline in public spending.
The Commerce Department said on Monday that construction spending edged up 0.1% after increasing 0.5% in February. Economists polled by Reuters had forecast construction spending would accelerate 0.7%. Construction spending increased 11.7% on a year-on-year basis in March.
The government reported last week that the economy contracted at a 1.4% annualized rate in the first quarter amid record imports. While investment in residential construction grew last quarter, spending on nonresidential structures like gas and oil well drilling fell for a fourth straight quarter.
Spending on private construction projects gained 0.2% in March after rising 0.7 in February. Investment in residential construction increased 1.0%. Single-family homebuilding spending rose 1.3%, while outlays on multi-family housing projects dropped 0.5%.
Residential construction is being underpinned by strong demand for housing, though momentum could slow, with 30-year fixed mortgage rates soaring above 5%.
Investment in private non-residential structures declined 1.2% in March. Spending on public construction projects fell 0.2% after dipping 0.1% in February. Outlays on state and local government construction projects decreased 0.5%, offsetting a 2.4% increase in federal government spending.
(Reporting by Lucia Mutikani; Editing by Paul Simao)