Crash Hasn’t Yet Affected Construction, Group Says

The effects of the Oct. 19 stock market crash have not yet been felt in the construction industry, even though contracts for new projects dropped about 8% in November, a research group said Tuesday.

McGraw-Hill Inc.’s F. W. Dodge unit said contracting for new construction, not counting housing or office buildings, fell in November to an annual rate of $241.12 billion from $261.39 billion in October.

Contracting had risen 8% in October from September.

“There’s little evidence of a reaction to the stock market crash in current construction data,” Dodge chief economist George Christie said in a statement.

Dodge said the seasonally adjusted annual rate of non-building construction, which includes public works and utility company projects, fell 20% in November to $40.76 billion from $50.95 billion in October.

Still Early

Non-residential building fell 4% to $87.38 billion from $90.97 billion and residential building fell 5% to $112.99 billion from $119.47 billion.

“Non-building construction has been unusually erratic throughout all of 1987, with month-to-month change averaging better than 15%,” Christie said. “This instability has mostly to do with the uneven release of federal public works funds and little if anything to do with Wall Street.

“Considering the lead time necessary in construction planning, it is still early to be looking for signs of retrenchment. What our current data show are projects close to being started in October weren’t suspended in November, and that implies a certain amount of confidence in the future.”

He attributed the November fall in non-residential building to the glut of office space and the fall in residential construction to the rise of home mortgage rates.