Construction growth stalls in August.

New construction contracts in August remained unchanged from July's lack-luster rate, according to the F. W. Dodge Division of McGraw-Hill.

The flat pattern of activity held the seasonally adjusted Dodge Index at 90 (1987=100), virtually the same level reported since May when the recovery of the building industry initially lost momentum. The latest month's data also showed only modest change for the industry's three main sectors, as a further decline for nonresidential building offset marginal improvement for housing and nonbuilding construction (public works and utilities).

"It's now four months in a row that the building industry has been unable to offer much support to the sputtering economy." said Robert A. Murray, director of construction forecasting for F. W. Dodge. "While weakness in the over-built commercial markets comes as no surprise, the continued sluggishness in homebuilding since the spring has effectively put the construction recovery on hold. And, despite lower mortgage rates, housing has yet to show a sustained turnaround from its second quarter slide."

Non-residential contract value in August was down one percent, as this sector came in with its second lowest volume so far this year. Both retail and manufacturing construction experienced declines. while institutional building continued to recede from last year's heightened amount. "With the weak condition of state/local budgets, institutional building is presently unable to pick up the slack from the beleaguered commercial categories," Murray added.

Non-building construction managed to advance one percent, due to the start of several large power plant projects. Meanwhile, public works construction fell back from its brief July surge, returning to a level more consistent with current funding of federal programs.

August contracts for residential construction edged up 2 percent, as a modest rise for single family housing combined with a multifamily rebound from July's dismal showing. While there's some hope in the latest month's Dodge data for the beginning of a housing upturn, Murray noted,' much more substantial gains will be required in coming months if the industry's recovery is to get back on track. Home-building remains the key for the industry's near term prospects."

The stalled condition for construction has meant an erosion of 1992's year-to-date comparisons versus 1991. Whereas the mid-year gain stood at 8 percent, the January-August comparison has seen the lead dwindle to 5 percent. Regionally, the North Central continues to set the pace with an 11 percent advance for 1992's first 8 months. The South Central and the West, with respective gains of 6 and 5 percent were close to the national average. Lesser improvement was reported in the Northeast, up 2 percent, and South Atlantic, up one percent.