Construction spending data are known for their volatility which should limit the surprise from a very unexpected 1.7 percent decline in March, far below Econoday's consensus range. The housing sector is the weakness in the report with residential spending down 3.5 percent in the month including dips for both single-family homes, down 0.4 percent, and multi-units, down 2.7 percent. Home improvements, which have been soft, fell 8.0 percent in the month.
But the minus signs don't stop here with private non-residential spending, held down by continuing weakness in factory spending and a monthly downturn for commercial spending, falling 0.4 percent in the month. Spending on public building is mixed with highways & streets showing a gain offset by a flat result for educational building.
Today's data are a surprise for forecasters but are offset by a heavy upward revision to February, now at plus 1.0 percent from an initial 0.1 percent gain, and may paradoxically build up expectations for a construction rebound in coming reports. Watch for housing comments in tomorrow's FOMC statement and also construction payrolls, which have been strong, in Friday's employment report.