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Washington, D.C., October 30, 2001 -- Hesitant home-buyers, cautious real estate investors, the weaker fiscal standing of state and local government and a reduced demand for commercial space will pose the biggest challenges to the construction industry during the first half of 2002. But despite those issues, low interest rates and the potential support of a federal stimulus package should help construction activity improve during the second half of 2002. The result is that the value of new construction starts for all of 2002 is projected at $481.0 billion, just slightly below the $481.4 estimated for 2001.
That outlook was presented by Robert Murray, vice president of economic affairs for the Construction Information Group, a division of The McGraw-Hill Companies (NYSE: MHP). Mr. Murray delivered his annual forecast to industry leaders at F.W. Dodge's Outlook
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2002 Executive Conference held at the Capital Hilton in Washington, D.C.
For all of 2001, Dodge construction starts are projected to climb 2 percent from 2000 levels (reaching $481 billion). Although it is only modest growth, 2001 will have marked the 10th consecutive year of expansion for construction activity, when viewed on a current dollar basis.
Prior to September 11th, the economy was already teetering close to recession. Economic growth during the first quarter of 2001 was reported at 1.3 percent, followed by 0.3 percent in the second quarter.
According to Mr. Murray, "the impact of the events of September 11th will be to deepen and lengthen the economic slowdown already underway. Substantial layoff announcements in travel-related industries join high tech
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nology as depressed sectors of the economy. The weak job market, along with diminished confidence levels, means that consumer spending will not provide the same support as in previous years. However, the stage has been set for the economy to improve as 2002 proceeds, given lower interest rates and the fiscal push coming from the federal government. This will also have a positive impact on the construction industry."
Mr. Murray had the following to say about the year ahead for specific areas of the construction industry:
Single-family housing will retreat through early 2002, as home sales and construction are adversely affected by the weak job market and diminished consumer confidence. When uncertainty eases, homebuyer demand will be able to show a greater response to low mortgage rates. The full year is projected at 1.175 million units (F.W. Dodge), a 2 percent decline from 2000, which
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