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WASHINGTON, March 23 (Reuters) – U.S. construction spending unexpectedly fell in January amid broad weakness in private projects, government data showed.<\/p>\n
The Commerce Department’s Census Bureau \u200csaid on Monday that construction spending dropped 0.3% after an upwardly revised \u200c0.8% jump in December, which was the largest increase since April 2024.<\/p>\n
Economists polled by Reuters had forecast \u200bconstruction spending would edge up 0.1%. Construction spending rose 1.0% on a year-over-year basis in January.<\/p>\n
The Census Bureau is still catching up on data releases following delays caused by last year’s government shutdown.<\/p>\n
Spending on private construction projects fell 0.6% in January after increasing 1.0% \u200cin December. Investment in residential \u2060construction decreased 0.8% after soaring 2.5% in December, which partly reflected the impact of a rise in renovations. Spending on new single-family \u2060housing projects fell 0.2% as higher mortgage rates continue to constrain activity.<\/p>\n
Though mortgage rates eased at the start of the year, they have been rising since the U.S.-Israeli war with \u200bIran \u200bstarted at the end of February. The Middle \u200bEast conflict has boosted oil \u200cprices and U.S. Treasury yields amid mounting inflation fears.<\/p>\n
The average rate on the popular 30-year fixed-rate mortgage has jumped to 6.22% from 5.98% on the eve of the war, data from Freddie Mac showed. Mortgage rates track the benchmark 10-year Treasury yield. Rising mortgage rates are adding to higher material and labor costs, which have risen because \u200cof import tariffs and an immigration crackdown.<\/p>\n
Residential investment \u200bhas declined for four straight quarters. Spending on \u200bmulti-family housing units, which account for \u200ba small share of the housing market, fell 0.7% in \u200cJanuary.<\/p>\n
Spending on private nonresidential structures like offices \u200band factories dropped 0.4% \u200bin January. Spending on nonresidential structures has contracted for eight consecutive quarters despite a surge in the construction of data centers to support artificial intelligence.<\/p>\n
Investment \u200bin public construction projects increased \u200c0.6% after dipping 0.1% in December. State and local government construction spending \u200brose 0.6% in January, and outlays on federal government projects increased 1.0%.<\/p>\n
(Reporting \u200bby Lucia Mutikani; Editing by Paul Simao)<\/p>\n<\/p><\/div>\n