Construction Spending Falls in January
Washington, DC, March 1, 2011 -- Construction spending in the U.S. fell in January, paced by the largest drop in commercial projects in 17 years, according to the Commerce Department.
The 0.7 percent overall decline brought the value of all projects down to a $791.8 billion annual rate, the lowest since August.
Outlays on private non-residential works dropped 6.9 percent, the most since January 1994.
Construction of power plants, hospitals, hotels and office buildings dropped during the month as tight credit and high vacancy rates restrained investment.
Home improvement spending helped boost residential construction.
Economists forecast a 0.4 percent declinesaid during a conference call the same day.
Government agencies are under pressure to cut spending. States are projecting $125 billion of budget deficits in fiscal 2012 and will lose most federal stimulus funds this year, the Washington-based Center on Budget and Policy Priorities said in a Jan. 21 report.
The current pace of construction activity is just about half of the $1.5 trillion level that economists believe would signal a healthy construction sector. They think it could be another four years before construction recovers to that level.