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Construction spending falls 100% more than predicted

Staff writer |
Spending on U.S. construction projects fell 1.7% in March and that was the second decline in the past three months, according to the U.S. Commerce Department.

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January activity plunged a record 4%, which is almost 100% more than a previous estimate of a 2.1% decline. Even with the recent weakness, construction activity was 4.8% higher in March than a year ago at a seasonally adjusted $856.7 billion.

Private residential construction rose 0.4% and that was the only major sector with a gain. Government construction activity fell 4.1%, the biggest drop since March 2002, while private nonresidential building was down 1.5%.

The weakness in government activity occurred at all levels. Spending by state and local governments was down 4.2% while spending by the federal government on construction projects was down 1.7%. Economists are expecting federal activity to be reduced in coming months as different agencies cope with across-the-board spending cuts that went into effect on March 1.

The weakness in nonresidential activity reflected declines in spending on commercial projects such as shopping centers.

The rise in residential construction continued a trend that began last year and showed that the housing recovery is being sustained by rising demand. Spending for single-family homes was up 1.6% while multi-family construction rose 0.3% in March.

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