May 1, 10:13 AM EDT

US construction spending drops 0.6 percent in March


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WASHINGTON (AP) -- U.S. construction fell in March as an increase in nonresidential construction was offset by declines in home building and government projects.

Construction spending dropped 0.6 percent to a seasonally adjusted $966.6 billion in March after a flat reading in February, the Commerce Department reported Friday. Construction activity has fallen or shown no gain in four of the past five months, underscoring the economic toll from a severe winter.

For March, housing construction dropped 1.6 as both single-family construction and apartment building contracted. It was the biggest slide since last June. Spending on government projects fell 1.5 percent, the third straight decline.

The one good news in March was a 1 percent rise in nonresidential construction, with gains in hotels and office buildings.

Economists are forecasting a rebound in coming months as warmer weather boosts activity.

The government reported Wednesday that the overall economy, as measured by the gross domestic product, grew at a meager annual rate of 0.2 percent in the January-March quarter.

The weakness stemmed in large part from a big drop in business investment spending on structures, which dropped at an annual rate of 23.1 percent. Much of that reflected cutbacks in drilling and exploration by energy companies in response to the sharp declines in energy prices.

Residential construction also slowed, growing at a modest annual rate of 1.3 percent in the first quarter, the weakest performance in a year.

Economists are looking for growth to strengthen in the April-June quarter. Warmer weather should boost multiple sectors of the economy, including construction and consumer spending.

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