New construction contracts fall 6% in Feb.

Contracting for now construction in February slipped back 6 percent, reported the F. W. Dodge Division of McGrawHill. The decline lowered the seasonally adjusted Dodge Index to 95 from January's 101 (1987=100), as construction retreated to the level that prevailed during the final two months of 1992.

Much of the drop resulted from a steep downtum for the volatile non-. building construction sector public works and utilities); meanwhile, housing witnessed relatively modest slippage and nonresidential building was able to show a slight gain. January"s data included several large utility projects, which boosted that month's non-building.total to an exceptionally high amount, producing much of the increase in the Dodge Index. In February, the non-building sector returned to a volume more consistent with its performance in the second half 1992. "Accounting for the impact of January's large. projects, the picture coming together in February is similar to this year's outset - the construction industry is holding its own for the momentum," said Robert A. Murray, vice president of economic affairs for F.W. Dodge. "Housing has lost some momentum from the strong volume shown at the and of 1992, but the modest gain for non-residential building is a hopeful sign at its worst declines have passed."

Non-building construction in February dropped 17 percent, due mostly to the sharp reduction in utility projects. Excluding utilities, the dip registered by the public works segment is a more manageable 5 percent, which is well within the normal variation shown by this group. "Although down in February, public works activity was still at a relatively healthy volume when compared to 1992 as a whole. The progress of the Administration's stimulus package through Congress will determine whether public works can break away to a higher level in the months ahead," Murray added.

The value of residential contracts slipped 5 percent in February. Single-family housing was responsible for most of this decline, as the multifamily side of the market held steady at a depressed pace. "Despite the lower interest rates experienced since the start of 1993, housing has yet to show much of a response - due in part to the harsh winter weather and to the hesitant expansion of the general economy," Murray noted. "Single-family housing remains a key element in determining how far the construction recovery goes in 1993. It's still early, but the lackluster beginning to 1993 is reason for some concern as to when the industry's recovery will really take hold."

Non-residential building edged up 2 percent in February, aided by a particularly strong volume of school construction and the start of a convention center in Orlando, Florida. After weakening towards the end of 1992, the institutional categories have shown modest improvement during 1993's initial months. An increase for store construction also helped the nonresidential total, but office and manufacturing starts remained at dismal levels.

At the end of the first two months of 1993, total construction on an unadjusted basis was down 4 percent from its performance of a year ago. Two regions reported substantially weaker showings this year as compared to 1992 - the North Central and West posted declines of 19 and 16 percent, respectively. The Northeast, up 2 percent, and the South Central, up 4 percent, enjoyed modest improvement; while the South Atlantic stood out with a 15 percent gain during this period.