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US construction spending drops in March

U.S. construction expenditures unexpectedly declined in March, amid large declines in both private and public outlays.

Census Bureau of the Commerce Department reported on Thursday that construction expenditures dropped by 0.5% following a 0.6% rise in February, which was slightly revised downward. The economists surveyed by predicted that construction spending would increase 0.2%, after an earlier reported 0.7% jump.

The construction spending in March increased by 2.8% compared to the same month last year.

The amount spent on private construction fell by 0.6%. Residential construction investment fell by 0.4%. However, new single-family housing projects saw a 0.1% increase in spending.

Homebuilding is being hampered by high mortgage rates and import tariffs. Last month, the National Association of Homebuilders calculated that tariffs on Chinese imports had been increased to 145%, and a 25% tax on foreign steel, aluminum, and other metals. This led to an increase in construction costs of $10,900 for each home.

In March, the expenditures on multi-family housing units remained unchanged. Investments in non-residential private structures such as offices and factories fell by 0.8%.

The spending on public construction projects decreased by 0.2%. Spending by state and local governments also decreased 0.2% while federal government expenditures fell 0.4%. Lucia Mutikani, Andrea Ricci and Andrea Ricci (Reporting)

(source: Reuters)