THE ECONOMY : Construction Spending Hits 4-Year Low, Industry Says

A construction contracting index compiled by F. W. Dodge, the industry reporting firm, slipped 3 points in October to its lowest reading in more than four years, the McGraw-Hill Inc. subsidiary said Wednesday.

The Dodge index declined to 145 from 148 in September and 185 a year ago, its highest value ever. A seasonally adjusted indicator of upcoming spending for ongoing construction work, it has a 1982 base value of 100.

The impact on construction spending of a 20% decline in new building projects since late last year “is only now being felt,” said George Christie, F. W. Dodge vice president and chief economist.

With more jobs being completed than started, he said, building material sales and construction employment recently started falling off. “Spending for materials and wages is bound to weaken further in the quarters ahead, adding to the risk of recession,” Christie added.

Dodge said October’s decline was mostly confined to housing construction, off 9% from September’s already low building rate. Single-family homes, apartment and condominiums showed the decline in equal measure, it said.

There was a small 2% increase in non-residential construction, the firm said, and a 5% rise in “nonbuilding” construction work--that is, not involving erection of an entirely new edifice.

Regionally, new construction was weakest in the Northeast, which showed a 23% decline, and the South Atlantic, which saw a 16% falloff. North Central, South Central and Western industries had modest declines.