Masonry Magazine February 1992 Page. 57
Construction Contracting Up Nine Percent in October
CONTRACTING FOR NEW CONSTRUCTION bounced back firmly in October, resuming the upward trend which began early in 1991, reported McGraw-Hill's F. W. Dodge Division. Recouping more than was lost in September's setback, the Dodge Index (1982-100) of construction contracting advanced 9 percent in October to 157, its highest value in more than a year. Most of the latest month's gain took hold in nonresidential building, the construction sector's "problem market."
"October's rebound brought the current rate of contracting nearly 20 percent above January's recession low of 132, and that's almost halfway back to the former peak," noted George A. Christie, vice president and chief economist for McGraw-Hill's Construction Information Group. "Despite occasional monthly setbacks, each quarter of 1991 has been a little better than the previous one, and October's gain gives the fourth quarter a good start."
Nonresidential building set the pace in October with a 20 percent surge of contracting for commercial, industrial and institutional projects. The latest month's spurt followed an equally sharp decline in September to the lowest value in eight years. Taken together, the most recent two months; average rate of contracting for nonresidential building was on par with the earlier months of 1991.
October's welcome rebound of nonresidential building doesn't mean that suddenly all is well in the commercial real estate industry where high vacancy rates and strict lending standards are formidable barriers to development. It does mean that the situation isn't as bad as September's contracting data indicated, Christie said.
Residential building, where most of 1991's recovery has been concentrated, edged up another 3 percent in October-seven increases in the last nine months. The latest gain, which was heavily tilted toward multifamily housing for a change, brought the overall improvement of the housing market since January to 35 percent.
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MASONRY JANUARY/FEBRUARY, 1992 57
rate from rising. It would take only the merest slowing to push the jobless rate back up to 7 percent...or above... next year.
STILL LOWER INTEREST RATES MAY BE NEEDED to keep the recovery going. The Federal Reserve has plenty of justification for easing monetary policy. For one thing, the Fed wants to get the money supply growing more rapidly. The most closely watched measure of money is climbing at a very tepid rate; faster growth is required to finance transactions of an expanding economy. For another, lower inflation is giving the officials the room to maneuver. Both the producer and consumer price indexes continue under firm control... increasing at moderate rates this year and perhaps slipping even lower next. Officials do not have to worry that lower rates will touch off new surges.
The Fed wants, most of all, to see the economy continue to gain momentum, avoiding subpar growth that would boost unemployment.
PRESSURE IS RISING TO REOPEN last year's budget cutting package, in response to the new world reality linked to changes in the Soviet Union. Congressional Democrats feel frustrated with the deficit reduction accord-an agreement negotiated last year by the Bush Administration and Congress. It puts separate spending caps on defense, domestic items and foreign aid, prohibits shifting funds among categories and sets a pay-as-you-go mandate.
MANY LAWMAKERS VIEW THE PACT as too restrictive, a straitjacket that prevents them from responding to the fast changing climate of world events. But recent efforts to