March 1, 2012 / 3:06 PM / in 7 years

January construction spending first drop in 6 months

WASHINGTON (Reuters) - Construction spending fell in January for the first time in six months as companies cut investment in buildings and the federal government scaled back projects, the Commerce Department said on Thursday.

Construction spending dropped 0.1 percent to an annual rate of $827 billion, confounding analysts’ expectations for a 1 percent increase.

It was the first drop since July 2011.

Spending on homes rose 1.8 percent, offsetting a 1.5 percent decrease in spending on business structures.

The housing market has been showing signs of an incipient recovery, with builders breaking more ground on new projects to meet growing demand for rental apartments.

Spending on public sector construction fell 0.2 percent in January, with investment by state and local governments rising modestly but outlays by the federal government plunging 5.5 percent.

Total private construction spending in January was flat at a $538.7 billion annual rate.

Reporting by Jason Lange; Editing by Neil Stempleman

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