(Bloomberg) - Construction spending in the U.S. unexpectedly fell in January following the biggest back-to-back gain in a year, reflecting a slump in nonresidential and government projects.
Outlays dropped 2.1 percent, the biggest decrease since July 2011, to a $883.3 billion annual rate, a Commerce Department report showed today in Washington. The median forecast of 45 economists surveyed by Bloomberg called for a 0.4 percent rise. Figures for December and November were revised up to show gains of 1.1 percent and 1.9 percent respectively, the best performance since the same two months in 2011.
Private non-residential building was depressed by a plunge in construction of power plants, while public outlays dropped to the lowest level since November 2006 as government agencies face budget strains. At the same time, mortgage costs near a record low are helping the residential real-estate market to recover, benefiting builders like PulteGroup Inc. (PHM)
“We’re likely to see improvement in housing this year,” Daniel Silver, an economist at JPMorgan Chase & Co. in New York, said before the report. “Growth rates for sales and construction should be strong.”
Estimates in the Bloomberg survey ranged from a drop of 0.7 percent to a gain of 1 percent, following an initially reported 0.9 percent increase for December and a 0.1 percent November advance.