U.S. construction spending unexpectedly fell in September as outlays on private nonresidential structures recorded their biggest decline in nine months, which could see a mild downward revision to the third-quarter economic growth estimate.
The Commerce Department said on Tuesday that construction spending slipped 0.4 percent after an upwardly revised 0.5 percent drop in August. Construction outlays were down 0.2 percent from a year ago.
Economists polled by Reuters had forecast construction spending rising 0.5 percent in September after a previously reported 0.7 percent drop in August. July's outlays were revised up to show them rising 0.5 percent instead of falling 0.3 percent as previously reported.
Spending on private construction projects dipped 0.2 percent in September, with outlays on residential construction rising 0.5 percent after falling 1.2 percent in August. The government reported on Friday that residential construction was a drag on economic growth in the third quarter.
Spending on private nonresidential structures, which includes factories, hospitals and roads, tumbled 1.0 percent in September, the largest drop since December 2015, after rising 0.5 percent the prior month.
Investment in nonresidential structures contributed to the economy's 2.9 percent annualized growth rate in the third quarter.
Public construction spending declined 0.9 percent in September, falling to its lowest level since March 2014.
Outlays on state and local government construction projects fell 0.8 percent, declining for a third straight month. Federal government construction spending tumbled 1.9 percent after surging 4.8 percent in August.
U.S. manufacturing met economist forecasts of 51.9 for the month of October, according to The Institute for Supply Management, an increase of 0.4 percentage point from the September reading.
The report said respondents had mostly positive comments and cited a "favorable economy and steady sales, with some exceptions."
These numbers come as economic activity in the manufacturing sector expanded in October. The overall economy grew for the 89th consecutive month, according to the report.
A reading above 50 indicates expansion in the manufacturing sector and a reading below 50 indicates contraction.
The New Orders Index, which includes reporting from apparel, food, beverage and more products, was 52.1 percent in October, a decrease of 3 percentage points from the prior month. The Production Index was 54.6 percent in October, an increase of 1.8 percent points from September.
The manufacturing index is based on surveys of more than 300 manufacturing firms by the Institute of Supply Management. It monitors employment, production, new orders, supply deliveries and inventories.
--CNBC.com's Berkeley Lovelace contributed to this report.