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