U.S. construction spending fell more than expected in January to its lowest level in five months, a government report showed Tuesday, pulled down by weak private construction outlays.
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The Commerce Department said construction spending fell 0.7% to an annual rate of $791.82 billion, the lowest since August. December's spending was revised to show a smaller 1.6% drop than the previously reported 2.5% decline.
Economists polled by Reuters had forecast construction spending falling 0.4% in January.
Private construction spending in January contracted 1.2% as investment in nonresidential projects tumbled 6.9% to $244.44 billion, the lowest since August 2004. The percentage decline was the largest since January 1994.
However, private residential construction rose 5.3%, likely reflecting a pickup in the construction of multifamily homes as demand for rentals rises.
Spending on public construction edged up 0.1% in January, with spending on federal projects surging 9.1%. State and local governments, which are under heavy budgetary pressures, saw their spending on construction dropping 0.9%.