Construction Spending Plunges 2.8% in September; Sharpest Fall in 8 Years

Construction spending sank 2.8% in September, its sharpest plunge in more than eight years, the government said today. Declines in all categories led to the worst showing since the last recession.

The Commerce Department said residential, non-residential and government spending totaled a seasonally adjusted annual rate of $428.7 billion. That was the lowest dollar level since $423.1 billion was spent in November, 1988.

The 2.8% decline was the sharpest since spending fell 3% in January, 1982, in the midst of the 1981-82 recession.

Spending was virtually unchanged in both July and August and has not increased since March, when it advanced 0.4%. July turned out to be weaker than previously thought. The department first reported construction actually turned up 0.3% that month.

Construction spending in September was 1.1% below the $433.4 billion spent in the same month of 1989.

Analysts have said declining confidence because of the Persian Gulf crisis has exacerbated an already weakened construction industry.