Stocks Weaken After Manufacturing Growth Slows
Stocks were slipping on Wall Street Monday morning after an industry group reported that U.S. manufacturing growth cooled in March and was weaker than economists had forecast.
Stocks were slipping on Wall Street Monday morning after an industry group reported that U.S. manufacturing growth cooled in March and was weaker than economists had forecast.
For homebuilders, it hardly feels like an economic recovery. Nearly two years after the recession ended, the pace of construction is less than half the level considered healthy. That weakness is weighing on the economy: Though new homes represent a small portion of overall sales, they have an outsized effect on jobs.
This week we turn the calendar page, and that change brings with it a raft of economic data. Fed Chairman Ben Bernanke will deliver his semiannual monetary policy testimony before Congress, while Wall Street waits on more earnings reports.
Want to see how the construction industry will do in 2011? Look at how architects did in 2010. By that gauge, last year's thin uptick in building design and engineering services foretells a similar small gain ahead for builders -- after two years of steep declines.
Fed by a thriving economy and a massive population movement from rural to urban areas, China's construction growth will dwarf that of the U.S. over the next 10 years. That's giving American architects and builders a chance to offset sluggish domestic demand.
A supposed truism on Wall Street is that betting against the crowd is always a wise move. And these days, the crowd is decidedly bullish. Yes, that's often a sign that the end is near. But right now, a good argument can be made that things will still get better.
The humbled housing sector took a modest step forward last month as starts rose a better-than-predicted 3.9% to a 530,000-unit annual rate. Still, at the current pace, the nation is 18 to 24 months from seeing normal levels of homebuilding.
The measure was boosted by the second straight monthly rise in private construction spending. Single-family homes posted their biggest gain in six months Still, it's way too soon to declare an end to the private building slump.
Hong Kong took a new step this week to let some air out of its real estate bubble, levying a heavy tax on property flippers -- a move that has already sent asking prices there downward. But Hong Kong's real estate risks are dwarfed by those in Mainland China.
U.S. construction spending%u2019s unexpected 0.5% rise in September was tempered somewhat by the fact that August%u2019s tally was revised downward to an 0.2% spending decrease, considerably worse than the initially estimated 0.4% gain.
Boosted by government projects, construction spending unexpectedly rose 0.4% in August. Though a single monthly gain hardly means the sector%u2019s long contraction is over, the data does hint that the period of large, monthly construction spending declines may be ending.
The U.S. construction industry went from bad to worse in July, and then retroactively worse still. The Commerce Department announced Wednesday that spending in the sector fell a worse-than-expected 1% in July, and revised June's estimate downward from a 0.1% increase to an 0.8% decline.
Boosted by fiscal stimulus, construction spending rose 0.1% in June, the Commerce Department said. But spending for May was revised downward.












