Wednesday, March 16, 2011

U.S. Home Construction took a dive in February

Amid a torrent of troubling news overseas, U.S. home construction took a dive in February and new building permits set a record low, an indication that the battered sector continues to be a source of weakness for the economy. "There's an employment component to housing starts. With the lack of new homes, the multiplier effect seems to be dead," John Brady, senior vice president at MF Global said, noting the sole positive investors might glean is the chance for builders to clear existing inventory.

The Commerce Department said February housing starts -- the number of homes on which construction began last month -- dropped 22.5% to 479,000 from an upwardly revised 618,000 in January. The original estimate for January was 596,000. Economists were expecting 575,000, according to consensus estimates from

The number of building permits also dropped, to 517,000 from 563,000 in January. Economists expected building permits to rise to 573,000.

The question(s) for reprographers:

If the bubble-bust of the residential design / development/ construction sector led the U.S. economy, and, not long afterwards, the non-residential design / development/ construction sector, into the “Great Recession”, will “recovery” of the overall design / development / construction sector (overall, meaning residential plus non-residential) first require “recovery” in the residential sector? Or, can non-residential recover without residential recovering?

Personally, I think the non-residential sector can recover without the residential sector recovering, but, if that’s what happens, the non-residential sector will not experience a “robust” recovery. A “robust” recovery in the residential sector must, I think, take hold before any real meaningful recovery can happen in the non-residential sector.

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