U.S. construction spending falls 1.7% in January, worse than expected

U.S. construction spending declined 1.7% in January 2008, as private builders continued to pull-back amid the housing slump, the U.S. Commerce Department announced Monday.

Economists surveyed by Bloomberg News had expected construction spending to decline 0.7% in January 2008. Construction spending is down 3.3% on a year-over-year basis.

Meanwhile, the December 2007 construction spending statistic was revised downward, to a 1.3% decline, from the earlier announced 1.1% decline, the Commerce Department said.

In January 2008, private residential construction declined 2.9%, public construction dropped 0.2%

Spending on private construction totaled a seasonally-adjusted annual rate of $827.4 billion, 2.2% (plus/minus 1.1%) below the revised December 2007 estimate of $845.7 billion. The estimated seasonally-adjusted annual rate of public construction spending was $294.1 billion, 0.2% (plus/minus 0.8%) below the revised December 2007 estimate of $294.7 billion.

Economic Analysis: Another negative data point for the U.S. economy. The telling stat: a 3.3% year-over-year decline in construction spending. Further, the January 2008 private construction statistic contained declines in almost every category, which suggests that building continues to contract across-the-board. Further, the 2.9% decline in private residential construction indicates that builders continue to retreat from the housing sector, a statistic that's consistent with other recent data indicating slowing home sales and rising inventories.