Weakness in construction activity will continue well into 2008
Posted by ecoshift on March 3, 2008
Manufacturing Activity Declines As Construction Spending Weakens – WSJ.com
By JEFF BATER
March 3, 2008 3:49 p.m.
WASHINGTON -…. “Weakness in construction activity will continue well into 2008,” Insight Economics analyst Steven Wood said.
Residential construction spending decreased 2.9% in January to $462.8 billion. For two years, the housing slump has acted as a drag on the broad measure of the economy, gross domestic product. The GDP housing component is residential fixed investment, which tumbled by 25.2% in the fourth quarter and reduced overall GDP by 1.25 percentage points. The slump has hurt spending by businesses and consumers. A drop in homebuilding, for instance, affects businesses that make goods the construction industry uses. And falling demand reduces prices; a drop in home values leaves owners feeling less wealthy — a mood seen tempering consumer spending, which is a big engine of GDP.