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Building Materials: How Big a Stimulus Boost?

Post Time:May 15,2009Classify:Industry NewsView:387

Much as Standard & Poor's Ratings Services expected, commercial construction activity declined in the latter half of 2008, primarily because of the normal lag after a residential downturn. However, this drop was much faster and deeper than previously anticipated. As a result, U.S. building-materials companies are now grappling with continued depressed residential end markets and rapidly falling commercial construction activity.

Residential construction remained exceedingly weak in 2008, with housing starts falling nearly 75% from their peak in 2005. Commercial construction, which was strong throughout the first half of 2008, began to sharply decline following the disruptions in credit markets in late September.

The forces creating the sharp downturn in commercial end markets for building-materials companies raise some important questions for the sector.

Source: BusinessWeekAuthor: shangyi

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