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US construction spending declines unexpectedly in January

U.S. Construction Spending unexpectedly declined in January. This was mainly due to a decrease in multi-family housing construction.

Census Bureau of the Commerce Department reported on Monday that construction expenditures dropped by 0.2%, after a 0.5% rise in December. The economists surveyed by expected that construction spending would remain unchanged. Construction spending in January increased by 3.3% year-over-year.

Spending on private construction projects fell by 0.2%. Residential construction investment fell by 0.4% but new single-family project expenditures rose by 0.6%.

The high mortgage rates are still a problem. This situation could worsen if additional duties were imposed on imports such as appliances and lumber. A surplus of unsold homes is on the market due to weak demand.

The President Donald Trump ordered a new investigation into trade that could add more tariffs to imported lumber. This would be in addition to the existing duties on Canadian softwood timber and 25% tariffs due on Tuesday on all Canadian and Mexican products.

In January, spending on multi-family housing units fell by 0.7%. The spending on home improvements continued to increase.

In January, the investment in non-residential private structures such as offices and factories remained unchanged.

The spending on public construction projects increased by 0.1%. State and local spending fell by 0.1% while federal government expenditures grew by 3.2%. Reporting by Lucia Mutikani; Editing and proofreading by Andrea Ricci

(source: Reuters)