Construction Outlays Lifted by Public Sector : Economy: Home building remained weak. Other reports indicated a slackening economy and fewer loans being taken out by consumers.

Record spending on public projects during October boosted construction for the first time since July, the Commerce Department said Monday, but private home builders remained in the doldrums.

Economists said the public spending surge would be temporary because governments at all levels--federal, state and local--are too financially strapped to continue putting more money into roads, sewers and other taxpayer-financed activities.

In all, spending on construction of all types increased to $434.4 billion in October from $428.9 billion, the department said. It followed a decline of 2.8% in September, no change in August and a slight $200-million increase in July over June.

But spending on residential projects--new homes and apartments--fell to $179.5 billion from $181.2 billion in September and was the lowest since March, 1986, when spending was $177.4 billion.

Mark Obrinsky, an economist with the Federal National Mortgage Assn.--Fannie Mae--said consumers are so worried about the Middle East crisis that they are unwilling to buy new homes.

Obrinsky said the earliest that housing construction is likely to revive is during 1991’s first quarter.

“The key is consumer sentiment even more than lower interest rates,” Obrinsky said. “If the Middle East situation worsens, we’ll likely have to set back forecasts for recovery.”

Nonresidential building activity also weakened in October, to $102 billion from $102.8 billion in September and $104.4 billion in August. The category includes factories, hotels and office buildings, all of which have suffered because of a weaker national economy.

Separately, the nation’s purchasing managers reported that their index of the economy’s vigor fell for the fifth straight month to 41.3% in November--the lowest level in eight years--as new orders plummeted.

The 7.7% rise in public spending during October, to a record $117.8 billion from $109.4 billion, is seen as a short-term boost. It surpassed the previous record of $115.8 billion set in August, 1989, department officials said.

Spending on schools, highways and sewers increased from September levels.

In another industry report, a banking group reported that consumers continued to pay their bills in the July-September quarter but were scaling back borrowing as the economy headed into what many analysts say is a recession.

Purchasing Manager’s Index The purchasing manager’s index tracks overall business activity at 300 industrial companies. November: 41.3% Source: National Assn. of Purchasing Management Construction Spending Billions of dollars, seasonally adjusted Oct., ‘90: 434.4 Sept., ‘90: 428.9 Oct., ‘89: 429.3 Source: Commerce Department