Business: Construction Spending Down 0.6% In November

By Stephanie Robins on January 12, 2010, 4:02 pm Posted in Business News

One of the reasons the financial community watches the construction spending is because it is a pretty accurate depiction of how the economy is fairing. If construction spending is down, then new construction building is down, which is an indicator of a slow economy. If the numbers for construction spending are up, then it indicates growth in the economy.

The downturn in spending shows that Americans aren’t quit ready to participate in economic recovery. Slow sales for Christmas have also shown this. Those in the construction industry hope to see a rebirth of new construction in the coming spring but are holding their breaths for now.

Lower November Numbers

The November numbers indicate a slow down in the economy. This comes as no surprise to anyone but it does indicate that the economy will not recover as quickly as anticipated. The November numbers showed a 0.6% decrease from October spending. While some of this can be accounted for the slower winter construction months it does not bode well for the already dismally low numbers.

New Home Construction

New home construction has all but ceased  in some parts of the country forcing hundreds of of lay offs in the construction industry. It has been one of the hardest hit industry for lay offs since the recession began. Some economists predict a return to pre-2001 levels in construction spending while others foresee more decline before the economy can bounce back.

 

Because much of the construction industry is tied into the real estate industry it depends a lot on how quickly the housing market can bounce back in 2010. A move toward renewable resources and rehabbing has also put a damper on construction costs. As the world shifts to green construction many companies are left out in the cold during bid time. If construction companies want to be competitive in the next decade they will have to invest in green technology.

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