Construction spending fell again in February as home building tumbled for a record 24th straight month.
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.