Spending on U.S. construction fell 1.2 percent in March for the biggest decline in 13 months, the government reported yesterday.

The Commerce Department said construction spending totaled a seasonally adjusted annual rate of $354.6 billion in March. The March decline was the biggest since a 2 percent drop in February 1985, and it followed a 1.1 percent rise this February.

Spending on residential buildings fell 0.5 percent in March to a seasonally adjusted annual rate of $154.3 billion. The decline came from a 1 percent drop in construction of single-family homes. Multi-family construction rose 3 percent.

Nonresidential construction fell 2.2 percent to a seasonally adjusted annual rate of $90.4 billion, led by an 11.7 percent plunge in industrial construction. Construction of shopping centers and other commercial buildings edged down 1.9 percent, while spending on office construction was unchanged.

Government construction spending fell 0.9 percent to an annual rate of $68.1 billion. The weakness was led by a 14.3 percent plunge in spending on housing projects and a 13 percent drop in hospital construction.

The $354.6 billion overall construction rate was up 6 percent from a year ago, before adjusting for inflation, with the biggest change coming in the government category, where spending was up 15 percent over the February 1985 level.