
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, October 5, 1993                   TAG: 9310050041
SECTION: BUSINESS                    PAGE: B5   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

NON-RESIDENTIAL CONSTRUCTION DRAGS OTHER SPENDING DOWN

Construction spending fell in August for the first time in four months despite increased outlays for single-family homes.

"Weakness in non-residential construction continued to weigh down total construction outlays for August," said Bruce Steinberg, an economist with Merrill Lynch & Co.

Both commercial and government spending declined, contributing to the 1.1 percent drop in outlays, which fell to a seasonally adjusted annual rate of $456 billion, the Commerce Department said Monday. It was the first decline since a 1.2 percent fall in April.

But the report revised July spending to a 0.1 percent advance, rather than the 0.5 percent decline in the department's initial estimate a month earlier.

Residential outlays were up 0.5 percent, to a $201.5 billion rate, because of a 0.9 percent gain in single-family expenditures, the third straight monthly gain. But spending on apartments fell 2.6 percent after advancing for three months in a row.

"Despite the August weakness, the home-building sector should make some gains in the coming months," Steinberg predicted. "Housing starts were up strongly in August to their highest level since 1990."

But some analysts were troubled by declines in new-home sales in both July and August, which could curb new construction. They had been looking to the lowest mortgage rates in more than two decades to spur sales and construction.

Although Steinberg thinks non-residential construction declined during the July-September quarter, he expects "some little improvement" during the final three months of the year.

In August, non-residential commercial spending fell 1 percent, to an $88.1 billion annual rate, the second decline in a row. Declines included industrial and office building, motels and hotels and the category that includes shopping centers.

Government outlays were off even more, down 3.1 percent to a $124.6 billion rate that wiped out a 2.3 percent advance in July. Pacing the decline was an 8.4 percent drop in spending for streets and highways.

by CNB