12/8/2011
HEADLINES
STAFDA’s Foley: Economy in Neutral
“The current economic environment is stuck in neutral and depending on which economist you listen to, many are not predicting a recovery period for the construction industry until 2015,” STAFDA executive director Georgia Foley reported at the association’2 35th annual convention.
“Many experts wondering if we’re headed for another recession,” Foley added.
• The National Home Builders Association reports an average of 6.2 months supply of homes on the market and the median home price 5% lower than a year ago.
Foley observed, “tight credit and appraisal problems still plague would-be buyers and home prices are expected to continue their tumble well into the future.”
• One in five Americans with mortgages owe more than their home is worth an equity has fallen to 38% from 59% in 2005.
• McGraw Hill Construction calculates that the total construction for the first nine months of 2011 is down 5% from the same period of 2010, Foley reported.
Tight federal, state and local budgets “are retraining the amount of construction taking place in the institutional building and public works sectors,” she added.
The slow pace of job creation and continued economic uncertainty is causing developers and lenders to remain hesitant about construction projects.
• “The quasi good news is that overall residential construction is stabilizing at a low volume after having shown declines earlier this year,” Foley noted. “Multi-family housing is progressing, but at a slower pace. The commercial side of the nonresidential market is mixed.”
Office and retail construction show modest up ticks, but warehouse construction and manufacturing have been in steep declines during 2011, Foley added.
McGraw Hill anticipates 2012 will remain flat even if housing and commercial starts increase, because they will “be offset by weakness in the public works and institutional building sectors.
• Foley noted that unemployment continues around 9% and that there is no precedent back to 1948 for such high unemployment two years into what economists define as recovery.
Most businesses have reduced headcount and “are leery to rehire employees,” Foley observed. “They’ve learned to squeeze ore work and revenue out of a smaller workforce.” They will rehire only when they see higher sales. Web: STAFDA.org ©2011 GlobalFastenerNews.com
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