By Jim Haughey
The value of construction starts increased 4% in January after a weak December in spite of continuing unseasonably poor construction weather. Starts were 25% higher than in the previous January. Job-site construction spending fell 10% since last January. Interpret the divergence this way. The sharp decline in starts in early 2009 cut starts below completions leading to the year-long fall in construction spending. Starts plunged nearly 50% from August 2008 to June 2009. Since then, starts have rebounded nearly 50% so the pipeline of work is again expanding and will lead to resumed increases in monthly construction spending in a few months, with progressively larger gains through 2011.
Residential, heavy and institutional building starts were all about the same in January as in December. The major change was a 47% jump in commercial building starts which reversed a similar drop in the previous month. Hence, this is not a signal that the commercial starts trend has abruptly improved. Still, there is a hint that improvement is coming soon.
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