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Construction Spending in U.S. Decreased More Than Estimated in February

Construction spending in the U.S. fell more than forecast in February, indicating the economic recovery has not yet spread to the building industry.

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The 1.4 percent drop was the third in a row and brought the value of all projects down to a $760.6 billion annual rate, the lowest since October 1999, Commerce Department figures showed today in Washington. The median estimate of economists in a Bloomberg survey called for a 0.2 percent decline.

Outlays on home building dropped during the month as new- home prices and sales continued to fall. In addition, deficit- strapped state and local governments are restricting funding for public works.

“The housing sector still looks to be in pretty dire straits,” Scott Brown, chief economist at Raymond James & Associates Inc. in St Petersburg, Florida, said before the report. “We’re seeing prices still weakening at this point. If we get much better job growth, we’ll have better results in the housing sector.”

Another report today showed employers added 216,000 workers to payrolls in March, and the jobless rate dropped to a two-year low of 8.8 percent, beating the median projection of economists surveyed by Bloomberg. Private employment, which excludes government agencies, climbed by 230,000 after a 240,000 February increase, marking the biggest back-to-back gain since 2006.

Estimates for the construction figures of 49 economists ranged from a drop of 1.2 percent to an increase of 2.5 percent. The Commerce Department revised the January reading down to a 1.8 percent from a previously estimated decline of 0.7 percent.

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Source: Bloomberg News