CONSTRUCTION spending dropped 0.1 percent in July, fifth consecutive decline
Tuesday, September 4th 2001, 12:00 am
By: News On 6
WASHINGTON (AP) _ Construction edged down in July, the fifth monthly decline in a row, as spending for home improvements fell sharply.
The Commerce Department reported Tuesday that spending for all building projects slipped by 0.1 percent in July to a seasonally adjusted annual rate of $859.4 billion.
Building activity in June, which originally was reported as a 0.7 percent decrease, was revised to an even bigger drop of 1.0 percent.
The nation's economy barely grew in the second quarter, expanding at a rate of just 0.2 percent. But one sector that has held up well during the yearlong economic slowdown is construction and housing activity, thanks to lower mortgage rates.
The Federal Reserve has cut interest rates seven times this year in an effort to avert a recession. The rate reductions lower borrowing costs and are designed to spur demand, which should boost economic activity.
In July, spending on all residential building declined by 0.7 percent. Spending on single-family homes as well as apartments, condos and other multifamily housing rose. But spending on home improvements fell by a sharp 3.6 percent.
Spending on commercial projects rose 0.7 percent, reflecting increased outlays for industrial complexes and educational buildings.
Big government projects saw spending go up by 0.9 percent in July, boosted by more spending on highways and schools.
The Bush administration and private economists are counting on the Fed's aggressive credit easing and tax-rebates checks to lift economic activity to higher levels in the second half of this year.
Though construction spending has declined over the last five months and housing sales have bounced around, the level of activity still has remained stable and is helping to keep the economy out of recession, economists say.