Construction spending fell 0.2 percent on the month in March as another dip on the residential side, down 0.7 percent, more than offset a 0.2 percent non-residential rise. Spending for both single-family and multi-family homes fell, down 0.2 and 0.6 percent respectively, underscoring the dampening effect of high mortgage rates on housing which is a topic Jerome Powell will certainly be addressing at this afternoon's FOMC press conference. On business investment, the Fed has likewise cited high financing rates as a negative, evident in the last three of these reports that have seen an abrupt topping in non-residential spending.

Construction is an emerging negative for the US outlook and with today's results coming in at the very low end of the consensus range leaves the Relative Performance Index at minus 12 to indicate slight underperformance for the US economy and when excluding inflation data at minus 34 to indicate tangible underperformance for real economic activity.

Construction spending is expected to increase 0.3 percent on the month in March versus February's 0.2 percent dip that masked a solid gain for single-family homes.

The dollar value of new construction activity on residential, non-residential, and public projects. Data are available in nominal and real (inflation-adjusted) dollars.

Construction spending has a direct bearing on stocks, bonds and commodities because it is a part of the economy that is affected by interest rates, business cash flow and even federal fiscal policy. In a more specific sense, trends in the construction data carry valuable clues for the stocks of home builders and large-scale construction contractors. Commodity prices such as lumber are also very sensitive to housing industry trends.

Businesses only put money into the construction of new factories or offices when they are confident that demand is strong enough to justify the expansion. The same goes for individuals making the investment in a home.

A portion of construction spending is related to government projects such as education buildings as well a highways and streets. While investors are more concerned with private construction spending, the government projects put money in the hands of laborers who then have more money to spend on goods and services.

On a technical note, construction outlays for private residential, private nonresidential, and government are key inputs into three components of GDP--residential investment, nonresidential structures investment, and the structures portion of government expenditures.

That is why construction spending is a good indicator of the economy's momentum.