U.S. builders trimmed construction spending slightly in March, one month after building activity hit an all-time high.
Construction spending slipped 0.2 percent in March to a seasonally adjusted $1.218 trillion, the Commerce Department reported Monday. In February, it rose 1.8 percent to a record high of $1.22 trillion. The result in March reflected drops in nonresidential construction and in the government sector, which offset a strong increase in residential activity.
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Even with the slight decline, March activity was the second highest on record. The figure underscores the key role construction is playing in the overall economy, especially in home building. Demand for homes has been rising amid low unemployment and rising incomes, but many buyers have been frustrated by limited inventory and rising prices.
Residential construction climbed 1.2 percent to the highest level since June 2007, a period dating back to the housing boom of the past decade. In the first three months of the year, home construction grew at a 13.7 percent rate, one of the few bright spots in a dismal quarter in which overall growth slipped to just 0.7 percent. That was the weakest showing in three years.
Nonresidential building fell 1.3 percent in March as spending on office buildings and the category that covers shopping centers both fell. Government activity dropped 0.9 percent with weakness in the state and local level.
Economists believe the economy will bounce back in the current quarter to growth of 3 percent or better, helped by continued strong gains in construction.
In March, spending by state and local governments on construction projects fell 1.4 percent which offset a 4.5 percent rise in the smaller federal government sector.
President Donald Trump has talked about spending $1 trillion over the next decade on a major infrastructure program to upgrade the nation's aging highways, airports and bridges. But so far, he has yet to send Congress a proposal, although Democrats have said this is one area where he is likely to get Democratic support.