Builders started work on fewer homes, apartments and government projects in February, pushing construction activity down to the lowest level in more than a decade.
Construction spending tumbled for a third straight month, dropping 1.4 percent in February, the Commerce Department said Friday. The weakness pushed total activity down to a seasonally adjusted annual rate of $760.6 billion, the smallest total since October 1999. That was below the previous recession low set back in August.
Activity at the February level is about half the $1.5 trillion pace that economists believe would signal a healthy construction sector. They think it could take up to four years for construction to fully recover from the bursting of a housing bubble that pushed the country into a deep recession.
The recession depressed demand for office buildings, hotels and shopping centers, further deepening the problems in construction. In addition, banks tightened lending standards, making it harder for builders to get financing for projects.
For February, private construction activity dropped 1.4 percent to an annual rate of $468 billion, the slowest pace for non-government building since April 1997.
Private residential construction fell 3.7 percent to an annual rate of $228.5 billion in February. Single-family and multi-family construction both declined as housing continues to struggle with a glut of unsold homes and record levels of foreclosures.
Non-residential construction was the only major sector showing an increase, rising 0.9 percent to an annual rate of $239.6 billion, still far below activity before the recession hit. For February, there were gains in transportation, communication, power and manufacturing projects. That offset declines in office building, hotels and shopping centers.
Government construction dropped 1.3 percent to an annual rate of $292.5 billion in February. That reflected a 0.7 percent rise in spending on federal projects and a 1.5 percent drop in activity at the state and local level. State and local budgets have come under pressure as officials struggle to get control of large budget deficits.
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