From Deseret News archives:
October construction spending drops 1.2 percent
The Commerce Department reported Monday that construction spending dropped by 1.2 percent in October, much bigger than the 0.9 percent decline many analysts expected.
Meanwhile, the Institute for Supply Management said its gauge of manufacturing activity fell to a reading of 36.2 in November, a 26-year low. That was a steeper-than-expected drop from the October reading of 38.9 and underscored that the hard economic times were beginning to have a major effect manufacturing. A reading below 50 indicates the sector is contracting.
The construction weakness was led by another sizable drop in home building, which has fallen every month but two over the past 2 1/2 years. Nonresidential building also weakened as developers face tougher times getting financing because the banking system is going through a severe credit squeeze.
Economists believe the construction industry will be facing severe troubles until an economic recovery is firmly launched, probably not until the second half of 2009.
Housing construction, which has been in a slump for more than two years, fell by 3.5 percent in October following a 0.5 percent drop in September. Private residential building activity, which totaled $338.8 billion at a seasonally adjusted annual rate in October, has managed increases in only two months over the past 31.
D.R. Horton Inc., a Fort Worth, Texas-based home builder, last week reported a nearly $800 million loss in its fiscal fourth quarter, reflecting in part slower home sales. Other reports last week showed that sales of new homes in October dropped 5.3 percent to their lowest level in nearly 18 years, while sales of existing homes fell a bigger-than-expected 3.1 percent in October.
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