Masonry Magazine June 1999 Page. 33
March Construction Contracts Slip 2 Percent
New York, N.Y. April 28, 1999 - Contracting for new construction receded 2 percent in March to a seasonally adjusted annual rate of $365.2 billion, it was reported by the F.W. Dodge Division of The McGraw-Hill Companies. The mild drop was due to a slower pace for residential building, which continues to ease back from the exceptional levels registered at the close of 1998. At the same time, nonresidential building stabilized after its loss of momentum in February, while nonbuilding construction showed moderate growth.
The latest month's data produced a 145 reading for the Dodge Index (1992-100), down from a revised 148 for February. "It's true that the early months of 1999 have seen some deceleration from the very strong activity at the end of last year," stated Robert A. Murray, vice president of economic affairs for Dodge. "Yet, the loss of momentum witnessed so far is not enough to suggest that construction is about to depart from the elevated levels achieved in 1998. During the first quarter of 1999, the Dodge Index was just one percent below the average monthly pace in 1998, so contracting is still proceeding at a healthy clip. The pattern in March corresponds in a broad sense to what is expected for the year a bit less single family housing, but with an upward push still coming from other parts of the construction industry."
Residential building in March fell 6 percent to $171.7 billion, due to a 9 percent drop for single family housing. The residential downturn was cushioned by a 14 percent increase for multifamily housing. March did see slight upward movement in the cost of financing, as fixed mortgage rates edged up to 7.1 percent, and they have since settled back to 6.9 percent. However, the retreat for single family housing was related to construction activity returning to a more sustainable level after the torrid pace at the start of the year. Constraints on the supply side, meaning shortages of materials and skilled labor in some markets, are placing limits on how fast single family construction can proceed. By region, residential building showed the following pattern in March the South Atlantic, down 12 percent; the West, down 7 percent; the South Central, down 5 percent; the Midwest, down 4 percent; and the Northeast, up one percent.
Nonresidential building, at $122.4 billion in March, was essentially unchanged from its February amount. Stores and shopping centers, up 25 percent, regained the high level activity of recent months with the help of a $91 million project in Miami, Florida; and a $70 million project in Nashville, Tennessee. "Both projects show the continued strength of entertainment-based retailing, in which a large shopping mall includes cinemas and theme restaurants to draw customers," indicated Murray. Hotel construction in March rebounded 50 percent from a weak February, and growth was also shown by warehouses, up 19 percent; schools, up 15 percent; and manufacturing plants, up 13 percent.
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