Washington, DC, Oct. 2—Construction spending dropped by 0.4% in August led by cutbacks in private builders'''' projects including offices, industrial complexes and hotels, according to reports from the Commerce Department. The decline follows a 0.1% decrease in July.
In the construction market, the commercial side continues to be the source of weakness, reflecting reluctance by businesses to make big commitments in capital spending, including new factories and other buildings, given economic uncertainties, including a possible war with Iraq.
“Uncertainty tends to be the enemy of investment,” said economist Clifford Waldman, president of Waldman Associates. “You would have to be very sure of yourself to build a commercial building these days.”
Spending on all construction projects around the country fell to a seasonally adjusted annual rate of $829.8 billion in August, representing a 0.4% decline from the previous month.
For all commercial projects by private builders, spending declined to a rate of $159.2 billion in August, a 2% decrease from the month before. Spending on industrial complexes and office buildings each fell by 4.6% in August. Spending on hotels and motels—another segment still feeling the lingering effects of the terror attacks—went down by 4.1%.
On the residential side, spending on all housing projects dipped by 0.2% in August to a rate of $407.5 billion. Higher spending on apartments and other multifamily housing helped to offset lower spending on new single family housing.
For big government projects, spending rose by 0.8% in August to a rate of $202.7 billion. Higher spending on industrial facilities, schools and hospitals outweighed lower spending on military bases and highways and streets.
