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Construction contracts recede 1%.

Contracting for new construction in August eased back on percent, according to the F.W. Dodge Division of McGraw-Hill. The decline was the second in a row following June's surge of activity, but it still left the industry slightly ahead of the pace reported during 1993's first five months.

The latest month's data lowered the seasonally adjusted Dodge Index to 99 (1987 = 100) after July's revised 100. In June, the Index reached the year's high of 104; earlier, the Index had averaged 98 during the first five months of 1993.

Offsetting the August rise for housing was a fall-off by nonresidential building and non-building construction (public works and utilities).

Residential construction in August advanced 1 percent, as single family housing finally demonstrated some response to this year's low mortgage rates. Meanwhile, the multifamily side of the market fell back from its improved level of the previous two months, signaling that a sustained upturn for this over-built category had yet to arrive.

Non-residential building fell 2 percent in August, the result of a 9 percent drop for the commercial and industrial sector. Both offices and hotels returned to the very depressed levels reported earlier in the year, and manufacturing building dropped substantially from its recent gain. In contrast, store construction remained at July's strong pace, the highest in three years. Institutional building also offered support with a 4 percent August gain, led by a greater amount of educational building.

Non-building construction in August fell 3 percent, reflecting declines for bridge, sewer, and river/harbor development projects. Softening the downward pull were improved totals for highways and water supply systems. Even without the financing support which would have come last spring from passage of the Clinton Administration's stimulus package, highway projects during this year's first eight months have been relatively strong, climbing 12 percent over the same period a year ago.

On an unadjusted basis, total construction contract value in the January-August period maintained a 3 percent increase over 1992's corresponding volume. Most of the growth has taken place in the South Atlantic and South Central regions, each holding onto a 9 percent lead. Both the Northeast and the Midwest were up one percent over their year ago pace. Lagging behind was the West, posting a 3 percent decline during 1993's first eight months.
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Title Annotation:first five months of 1993
Publication:Real Estate Weekly
Date:Oct 6, 1993
Previous Article:Conservative approach pays off.
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