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isn't this what has been keeping the economy afloat?

May Construction Spending Takes Big Fall

WASHINGTON (Reuters) - U.S. construction spending fell an unexpected 1.7 percent in May, the biggest drop in a year, a government report showed on Tuesday, as spending on residential construction fell to its lowest since November.

Construction outlays fell to a seasonally adjusted $869.8 billion in May, the Commerce Department (news - web sites) said. Analysts polled by Reuters had been expecting a 0.4 percent increase.

Residential construction fell 0.9 percent, the third consecutive monthly decline, to a seasonally adjusted annual rate of $445.4 billion. Nonresidential construction fell 0.4 percent and public construction slid 1.8 percent.

"It's a weak report. It shows construction spending didn't immediately improve following the Iraq (news - web sites) war, but I think it probably understates the momentum that is building -- or rebuilding -- in the housing sector," said Stuart Hoffman, chief economist for PNC Financial Services.

Residential single family housing construction slipped 0.9 percent to a $287.8 billion clip, the lowest level since December.

Public construction fell to a $207.2 billion pace, its lowest level since June 2002, on declines in construction of roads, schools and public buildings.

Home building and sales have been vigorous despite weakness in other areas of the U.S. economy as home buyers have rushed to take advantages of interest rates that have slid to 40-year lows, making homes more affordable.

But business spending cutbacks have hobbled nonresidential construction, and tight state and local budgets are also restricting outlays for public construction spending.

http://story.news.yahoo.com/news?tmpl=story&ncid=1203&e=2&u=/nm/20030701/bs_nm/economy_c...