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US construction spending exceeds expectations in February

US construction spending exceeds expectations in February

The U.S. Construction spending in February increased more than anticipated as mortgage rates declined, boosting single-family homebuilding. However, rising economic uncertainty due to tariffs on imported goods could slow the momentum.

Census Bureau of the Commerce Department reported on Tuesday that construction expenditures increased by 0.7% following a 0.5% decline in January, which had been downwardly revised. The economists polled had predicted that construction spending would rebound by 0.3% following a 0.2% decrease in January.

In February, construction spending increased 2.9% on an annual basis. The spending on private construction projects increased by 0.9%. Residential construction investment grew by 1.3%. Outlays for new single-family homes also increased 1.0%.

Mortgage rates are down from their lofty highs at the beginning of the year. Tariffs on imported products remain a barrier for builders.

The President Donald Trump ordered a new investigation into trade that could add more duties to imported lumber. This would be in addition to the existing taxes on Canadian softwood timber, which is used for construction, furniture, and paper production.

Trump has increased tariffs on Chinese products to 20%, and imposed duties on steel and aluminium. According to the National Association of Homebuilders "builders estimate that a typical cost impact from recent tariff action is $9,200 per house."

In February, the expenditures on multi-family housing units remained unchanged. Investments in non-residential private structures such as offices and factories increased by 0.4%.

The increase in public construction spending was 0.2%. Spending by state and local governments increased by 0.4% while federal government expenditures declined 1.6%. Lucia Mutikani, Andrea Ricci and Andrea Ricci (Reporting)

(source: Reuters)