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U.S. construction spending posts surprise decline in August

A construction crew erects scaffolding at sunset on a new housing project in Silver Spring, Maryland March 1, 2014. REUTERS/Gary Cameron

WASHINGTON, Oct 1 (Reuters) - U.S. construction spending unexpectedly fell in August, hit by weaker private spending outside the housing sector and a pullback in public investments.

Construction spending dropped 0.8 percent to an annual rate of $960.96 billion, the Commerce Department said on Wednesday in a report that also revised downward spending estimates for the

prior two months.

Economists polled by Reuters had forecast construction spending increasing 0.5 percent in August.

The surprise decline was largely due to a 1.4 percent drop in money spent on private nonresidential construction, although outlays fell across the board with state and local construction

down 0.9 percent. The declines, however, came after a month in which spending in most construction categories had posted strong gains.

Private spending on housing fell only 0.l percent in August, which is unlikely to unmoor expectations of an ongoing recovery in the housing market.

(Reporting by Jason Lange; Editing by Andrea Ricci)