Construction spending during August 2008 remained steady, a better outcome than the 0.5 percent fall that economists expected, according to The Associated Press. Surprising was the 0.3 percent rise in residential activity, the first increase in housing activity since March 2007, and the second monthly rise for housing in the past 29 months.

However, the Commerce Department’s Census Bureau revised July activity to show a much bigger drop of 1.4 percent, compared to the 0.6 percent decline initially reported.

The 0.3 percent increase in housing left spending in this area at a seasonally adjusted annual rate of $343.6 billion. The gain was offset by a 0.8 percent drop in spending on nonresidential projects, which fell to $415.95 billion.

The concern, the AP reported, is that the severe credit crunch will cause banks to shut off lending for commercial projects, further deepening the economy’s problems.

August construction spending in manufacturing (+61.5 percent), lodging (+29.3 percent), power (+26.8 percent) and public safety (+22.5 percent) all increased from August 2007.

During the first eight months of this year, construction spending amounted to $713.5 billion, 5.9 percent below the $758.1 billion for the same period in 2007.