Construction spending nationwide unexpectedly fell in December to touch its lowest level in nearly 10-1/2 years as investment in both public and private projects declined, suggesting the sector would continue to struggle this year as federal stimulus spending tapers off.

The Commerce Department said on Tuesday construction spending dropped 2.5 percent to an annual rate of $787.9 billion, the lowest level since July 2000. The government revised November’s data to show a 0.2 percent fall, which was previously reported as a 0.4 percent increase.

This information is release just as another report details that construction employment is falling as well. It decreased in nearly 70 percent of the country’s metropolitan areas in December 2010 compared to the same time last year, according to a report from the Associated General Contractors of America.

Severe winter weather in many states and the winding down of a number of stimulus and other temporary federal construction programs are attributed to the decline, according to a statement. Metro areas in Nevada and California were particularly hard hit.

Economists polled by Reuters had forecast construction spending flat in December. For the whole of 2010, construction spending declined 10.3 percent to $814.2 billion, also the lowest since 2000.

Spending in December was weighed down by a 2.8 percent fall in investment in public projects, which reflected an 11.6 percent drop in federal construction projects. State and local government spending on construction projects fell 1.8 percent in December.

Investment in private construction dropped 2.2 percent in December, ending three straight months of gains. Spending on private home building tumbled 4.1 percent, with private nonresidential outlays dipping 0.5 percent.

Homebuilding and the construction of structures were minor contributions to fourth-quarter gross domestic product growth.