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Construction Spending Falls Less Than Expected

U.S. construction spending fell at a slower-than-expected rate in February, a government report on Wednesday, suggesting that the pace of deterioration was start to moderate.

In the meantime, factory activity shrank in March, though at a slower pace than the previous month, according to an industry report.

The Commerce Department said spending on construction projects slipped 0.9 percent to a seasonally adjusted annual rate of $967.5 billion, the lowest since March 2004, after falling by a revised 3.5 percent in January.

Analysts polled by Reuters were expecting a 1.8 percent decline in overall construction spending in February. Compared to the same period a year-ago, construction spending dropped 10 percent. Spending in the first two months of 2009 is down 10.9 percent versus the same period last year, the department said.

Private residential construction spending, the main trigger of the U.S. recession, tumbled 4.3 percent in February to $275.1 billion, the lowest since December 1997, after falling 3.7 percent the prior month.

Spending on public construction rose 0.8 percent in February, the biggest gain since October, versus a 2.4 percent decline in January, while spending on private nonresidential structures increased 0.3 percent after falling 4.3 percent the prior month.

Factory Sector Shrinks More Slowly

The Institute for Supply Management said its index of national factory activity rose to 36.3 in March from 35.8 in February, slightly above economists' median forecast for a reading of 36.0.

A reading below 50 indicates contraction in the sector. ISM said the index has been below this level for 14 straight months.

[ Released on 04/01/2009 ]

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