Construction spending fell at its fastest rate in 14 years in January, the Commerce Department announced today, shattering expectations with a 1.7% drop. Analysts had expected just a 0.7% decline, the Wall Street Journal reports. Residential spending was the big drag, falling 2.9%, but non-residential spending was also down and could keep heading in that direction as banks raise commercial loan standards.
“The collapse in non-residential building is the next shoe to drop,” one economist told Bloomberg. “Right now we have a very weak investment environment.” A separate report confirmed that manufacturing is officially contracting. The latest ISM index hit 48.3, its lowest point since April 2003. Any reading below 50 indicates contraction.