Construction spending in the US fell by a smaller-than-expected amount in September as a rebound in nonresidential activity helped offset further weakness in home building. The Commerce Department on Monday reported that construction spending dropped by 0.3 percent in September, less than the 0.8 percent decline many economists had been expecting. Spending had risen by 0.3 percent in August after a huge 2.4 percent plunge in July. The weakness in September was led by a 1.3 percent drop in housing construction, which has fallen every month but two over the past 30 months. Spending on government projects fell by 1.3 percent, the biggest setback since January. The country in undergoing the worst housing slump in decades, a downturn that has triggered the nation's biggest financial crisis since the 1930s as banks have struggled to cope with billions of dollars of losses on mortgage lending. The Bush administration won congressional passage on Oct. 3 of a $700 billion rescue package designed to stabilize financial institutions by buying up bad assets and through direct government purchases of stock in banks. For September, the 0.3 percent fall in overall construction was the third drop in the past four months. It left total building activity at an annual rate of $1.06 trillion in September, down 6.6 percent from the level of a year ago. The 1.3 percent fall in housing construction left activity at a seasonally adjusted annual rate of $336.5 billion, down 27.7 percent from a year ago, underscoring the severity of the slump in this industry. After enjoying record sales for five consecutive years, housing has been struggling over the past two years with falling sales and prices and rising mortgage foreclosures. The housing slump is likely to continue due to tight credit markets, souring consumer confidence in the overall economy and rising unemployment. – AP Meanwhile, a measure of US manufacturing activity plummeted to its lowest level in 26 years in October. The reading of 38.9 reported Monday by the Institute for Supply Management was the worst reading since September 1982. Any reading below 50 signals contraction.
