Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, January 5, 1993 TAG: 9301050026
SECTION: BUSINESS PAGE: A3 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
CONSTRUCTION STILL STRONG
Construction spending rose in November to the highest level in two years, the government reported Monday.The Commerce Department said spending on residential, non-residential and government construction jumped 2.1 percent to $441.8 billion, up from $432.8 billion in October.
"I would expect the residential numbers will continue to climb modestly as the housing market continues to strengthen," said David Berson, an economist with the Federal National Mortgage Association.
"But some sectors such as apartments and office buildings are likely to remain weak for awhile because of high vacancy rates," he added.
November's construction spending represented the third straight increase and hit the highest level since it reached $443.3 billion in August 1990. But the department revised its preliminary estimate of a 1 percent gain in October to 0.8 percent.
Residential outlays increased 1.4 percent in November, to $193.5 billion, after gaining 2.4 percent a month earlier. It was the fourth straight advance.
Spending on single-family homes jumped 3.1 percent, to $126.5 billion, nearly matching a 3.3 percent advance in October.
But spending on apartments dropped 4.8 percent, to $11.8 billion, after sliding 1.6 percent the previous month. It was the third decline in a row.
Non-residential spending posted a 3.1 percent increase, to $87.2 billion, nearly double the 1.6 percent gain in October.
But Berson said he does not expect improvements soon in many areas of this sector, including office buildings and other commercial projects such as shopping centers, which have been overbuilt in many parts of the country.
"But as the economy expands, I would expect other non-residential areas such as factories to pick up as firms begin to spend on plants and equipment," he said.
Governments boosted their spending 3.2 percent to $122.2 billion, wiping out a 1.7 percent decline in October.
"We would view the increase in public construction as more of a one-month phenomenon" because of state and local budget cutbacks, said Marilyn Schaja, an economist with Donaldson, Lufkin & Jenrette Securities Corp. in New York.
For the first 11 months of 1992, construction spending was 10.1 percent above the same period of 1991. Residential spending was up 17.6 percent; non-residential fell 0.3 percent; and government spending was up 8.2 percent.