Construction spending falls again
WASHINGTON (AP) - April 1, 2008 The Commerce Department reported Tuesday that overall
construction activity dropped 0.3 percent in February, reflecting
weakness not only in home building but also in nonresidential
activity. Only government building projects showed a gain in
February.
Residential construction fell by 0.9 percent in February.
Residential activity has fallen every month since March 2006, a
record period of declines that underscored the severe downturn
going on in housing.
Analysts believe that housing will keep falling until a record
glut of unsold homes is reduced. That effort is being hindered by
the fact that mortgage defaults have soared to record levels,
reflecting the abuses that occurred in lending activity at the
height of the housing boom.
The weakness in housing is combining with soaring energy prices
and a severe credit crunch to push the economy close to a
recession.
The Bush administration is hoping that an economic stimulus
package will boost growth starting this summer, when 130 million
households begin spending their rebate checks.
In other economic news, a closely watched gauge of manufacturing
activity edged up slightly to a reading of 48.6 in March. That was
slightly better than had been expected but still signaled that the
manufacturing sector remained in contraction.
The Institute for Supply Management's manufacturing index had
been at 48.3 in February. Any reading below 50 is seen as a sign of
contraction.
The 0.3 percent drop in construction spending represented the
fifth straight decline in overall activity. Spending had fallen by
1 percent in January and 1.7 percent in December.
In addition to the continued fall in housing construction,
spending on nonresidential projects dropped by 0.1 percent in
February after declines of 1 percent in January and 0.2 percent in
December. Weakness in February reflected declines in office
building, health care facilities and schools.
Government spending was the one area of strength, rising by 0.4
percent with federal spending surging by 1.4 percent and state and
local projects rising by 0.4 percent.
Total construction spending dipped to $1.12 trillion at an
annual rate in February while private activity falling to $826.6
billion at an annual rate and government spending edging up to
$294.9 billion at an annual rate.
