The Commerce Department said on Monday that construction spending gained 0.2% after falling 0.6% in February.
Economists polled by Reuters had forecast construction spending surging 1.9%. Construction spending, which accounts for about 4% of gross domestic product, increased 5.3% on a year-on-year basis in March.
The government reported last week that the economy grew at a 6.4% annualized rate last quarter. That was the second-fastest GDP growth pace since the third quarter of 2003 and followed a 4.3% rate in the fourth quarter.
Tepid construction spending likely has no impact on economists’ expectations for double-digit GDP growth in the second quarter, fueled by massive fiscal stimulus and improving public health as more Americans get vaccinated against COVID-19.
Spending on private construction projects rose 0.7% in March, lifted by investment in single-family homebuilding. There is strong demand for housing but supply has lagged amid expensive building materials as well as land and labor shortages. That followed a 0.3% drop in February.
Spending on residential projects surged 1.7% in March after edging up 0.1% in February.
But outlays on private nonresidential construction like gas and oil well drilling fell 0.9% in March. Business investment in nonresidential structures fell in the first quarter for the sixth straight quarter as a rebound in mining exploration, shafts and wells was offset by a drop in commercial and healthcare buildings.
Spending on public construction projects dropped 1.5% in March after declining 1.6% in February. State and local government outlays decreased 1.4%, while federal government spending declined 2.1%.
Source: Economy - investing.com
