Demand for Construction Materials Dips
According to a recent report from Reed Construction Data, the declining economy continues to leave its mark on the construction industry, with demand for construction materials seeing a 6.5-percent volume decline at the end of 2008. The Jan. 13 report indicates that the dip is “consistent with the layoff of 82,000 construction workers in November and the 3.2-percent fall in the industrial production index for construction materials and supplies in the same month.”
“U.S. construction materials suppliers in November experienced a 3.6-percent monthly decline in orders, a 1.3-percent decrease in unfilled orders and increased their inventory 3.1-percent when they were trying to cut inventory,” the report continues. As a result, supplier inventory/sales ratio jumped from 1.43 to 1.47, equivalent to an extra day of inventory.
The report concludes that construction activity undoubtedly continued to decline in December (figures were not yet available), although the decline should begin to taper in the second half of 2009. The report states that the decline in November was spurred by the credit market collapse, and that materials suppliers will remain in “crisis mode” for more than a few months, while they try to cut production and discard excess inventory. MD