Ahead of the Bell: US construction spending

Construction spending report expected to show gains in March after weak start to year

Associated Press
US construction spending down 1.1 percent in January

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In this Wednesday, Feb. 18, 2015 photo, carpenter Joe Tominc cuts wood for a post on a home under construction in Pepper Pike, Ohio. The Commerce Department reports on U.S. construction spending in January on Monday, March 2, 2015. (AP Photo/Tony Dejak)

WASHINGTON (AP) -- The Commerce Department reports on U.S. construction spending in March. The report will be issued at 10 a.m. EDT Friday.

BUILDING UP: The expectation is that construction spending increased 0.5 percent in March, according to a survey of economists by data firm FactSet.

WINTER DECLINES: Over the previous two months, construction activity declined, falling 1.7 percent in January and 0.1 percent in February.

Economists believe construction activity picked up in March with gains expected in home building and spending on government projects.

The government reported Wednesday that the overall economy, as measured by the gross domestic product, grew at a meager annual rate of 0.2 percent in the January-March quarter with a major part of the weakness coming from a big drop in business investment spending on structures which dropped at an annual rate of 23.1 percent. Much of that weakness reflected cutbacks in drilling and exploration by energy companies in response to the sharp declines in energy prices.

Residential construction also slowed, growing at a modest annual rate of 1.3 percent in the first quarter, the weakest performance in a year.

Economists are looking for growth to rebound in the April-June quarter believing that with warmer weather various sectors of the economy including construction and consumer spending will strengthen in coming months.

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