Total spending on construction fell 1.7% in January from December, the biggest monthly drop since 1994, the Commerce Department reported this morning (March 3).

Construction spending fell to a seasonally adjusted annual rate of $1.12 billion, down from a downwardly revised December number of $1.14 billion, and 3.3% below January of last year. The drop was more than twice as deep as was expected by analysts on Wall Street.

Residential construction spending continued its nosedive, falling 3% from December to $455.7 million in January, which is 19.4% the level of January2007 and 33.7% below January 2006.

Total private construction spending was off 2.2% on a month-to-month comparison to a seasonally adjusted annual rate of $827.4 billion. Public construction, helped by an increase of 0.6% in the education category, fell 0.2% to a seasonally adjusted annual rate of $294.1 billion.