Construction spending stumbles in March, but is stronger for the year to date

The numbers: Construction expenditures were 1.7% lower in March compared with February, the Commerce Department said Tuesday. But a hefty increase to earlier spending estimates in prior months signals that outlays remain on a strong footing.

What happened: Spending ticked down to a seasonally adjusted annual $1.285 trillion rate in March from a $1.306 trillion pace in February. March expenditures were 3.6% higher than a year ago.

The Econoday forecast was for a 0.5% increase in March.

The big picture: In March, outlays for public sector construction projects were little changed, but private-sector spending fell 2.1%.

Residential construction spending was 3.5% lower for the month, but 5.3% higher, compared with a year ago.

With expenditures now seen as stronger in January and February than the government originally estimated, total construction spending for the year to date is 5.5% higher than the same period in 2017.

What they’re saying: “Construction spending was quite soft in March, falling by 1.7%, likely reflecting at least in part the difficult weather during the month,” said Stephen Stanley, Amherst Pierpont Securities chief economist. “I continue to look for a sizable bounceback in construction activity in the spring, as weather delays dissipate.”

Market reaction: The 10-year Treasury yield, which is hovering just below recent highs, ticked up after the release of the construction spending data and a report that showed manufacturers are facing higher costs.