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Construction Spending Drops to 7-Month Low

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 (Reuters)

U.S. construction spending in February recorded its largest drop in seven months as investment in private and government projects fell, which could cause economists to slightly mark down their first-quarter economic growth forecasts.

Construction spending fell 1.1% to an annual rate of $808.86 billion, the lowest level since October, the Commerce Department said on Monday.

Economists polled by Reuters had expected construction spending to rise 0.6%. Spending in January was revised to show a much bigger 0.8% fall instead of the previously reported 0.1% dip.

The second straight month of declines in construction outlays could prompt analysts to lower their growth estimates for the first quarter, which were raised on Friday following better-than-expected consumer spending data for February.

Overall construction spending was up 5.8% compared to February 2011.

Private construction spending fell 0.8%, declining for a second straight month. Spending on residential projects was flat. Investment in multifamily residential projects rose 2%, while single family outlays fell 1.5%.

Private nonresidential construction fell 1.6%, also dropping for a second month in a row.

Spending on public sector construction declined 1.7% in February as weak outlays on state and local government projects offset a 1.9% rise in investment by the federal government.