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Construction Materials Market Begins Slow Recovery

Post Time:Nov 13,2009Classify:Industry NewsView:399

Construction materials production inched up 0.6% during the summer on the strength of a 0.9% rise in sales and a 1.8% improvement in orders. Inventories held by manufacturers fell a substantial 4.2% but still remain excessive and will be a restraint on production growth into the winter. The tentative turnabout after a more than three year decline was largely due to federal pump priming in the housing marked. With the down payment subsidy now expired and the proposed extension still pending, the recovery in the materials market may stall this quarter. But it will resume again in early 2010. Housing starts will again be expanding and the steep slide in the nonresidential building market will end.

CAUTION: The Census Bureau indexes for construction materials are overstating the recent improvement in the market. The indexes are constructed by dividing the use of materials between construction, manufacturing and other end markets. This allocation uses the historical shares of purchases of steel, plastics, glass and other materials by each end market. The Census Bureau has no specific information on the share of steel production shipped to the construction market. As a result, the abrupt rise in manufacturing activity beginning in the late spring, especially for motor vehicles, causes too much material sales to be assigned to construction. Stability in construction materials production and shipments will probably not happen until the fall, possibly even the winter.

Source: www.reedconstructiondata.comAuthor: shangyi

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