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Construction declines across the board.

The rate of contracting for new constructionfell back 10 percent in November, following a surge of activity in the previous month, reported the F.W. Dodge Division of McGraw-Hill.

The November volume lowered the seasonally adjusted Dodge Index to 92 (1987=100), close to the level that prevailed over a five month period at mid year when the recovery of the construction industry lost momentum.

All three of the industry's main sectors retreated during November. In particular, there was a sharp slide for the vulnerable nonresidential building market.

"Given the tenuous quality of this recovery over the past year and a half, a setback from October's strong showing was not surprising," said Robert Murray, vice president of economic affairs for F.W. Dodge. "It still remains to be seen, just how durable the current upturn will be. Even so, a broader time frame offers a more positive slant on the industry's current status, as total construction was up 7 percent during 1992's first 11 months. 'This modest improvement stands in contrast to the performance of 1990 and 1991, which showed annual declines of 9 and 6 percent, respectively."

Non-residential construction in November plunged 17 percent to its weakest value so far in 1992, with reduced contracting reported by most of the categories. Manufacturing construction was down sharply from the unusually robust amount reported in October, while an earlier rebound for institutional building proved to be short-lived. The over-built commercial market remained dismal, although store construction was a rare bright spot with its third consecutive advance.

Non-building construction declined 10 percent in November, due entirely to a lower volume of electric power plant starts. If utilities are excluded, the nonbuilding total managed a 1 percent rise due to improvement in highways and bridges.

Residential construction slipped 4 percent in November, as the value of single-family starts reported by Dodge cased back from October's gain. Given improving consumer confidence and generally low mortgage rates, the pace of single family activity is likely to pick up in the quarter's ahead.

For the first 11 months of 1992, the 7 percent gain in total construction was due essentially to a strengthening housing market. Residential construction advanced 16 percent during this period, while non-building construction showed a more subdued 4 percent rise. Nonresidential construction could offer no support at all, slipping one percent from the January-November period a year ago.

Geographically, activity in the North Central region advanced 13 percent, followed by the South Central's 9 percent rise. Trailing the country's midsection were the South Atlantic and the Northeast, each up 6 percent, and the West, up 3 percent.
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Title Annotation:report from F.W. Dodge Div. of McGraw-Hill Inc.
Publication:Real Estate Weekly
Date:Jan 6, 1993
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