Housing Starts Plunge, Trucking To Feel Effects
Trucking companies that rely on moving construction materials will no doubt be disappointed in the latest numbers on new housing starts
Trucking companies that rely on moving construction materials will no doubt be disappointed in the latest numbers on new housing starts.
This morning the Commerce Department reported their largest drop in 17 months.
Construction of new homes fell 6.9% in August to their lowest level in 10 months. The government also revised July figures from a 2.8% increase to only 0.4%.
Newport Communications Senior Economist Jim Haughey says a surprisingly strong housing market has kept the economy out of recession during the severe manufacturing recession this year. But now it appears that the progressive weakening in consumer confidence and in the labor market may have cancelled some home buying plans.
“The sudden weakness in housing, if it persists, would very quickly reduce freight volume by 0.1 to 0.2%,” says Haughey. “At the same time, it would reduce construction employment by 10,000 to 15,000, which would ease the remaining driver recruitment problem.”
August starts of multi-family homes fell to 280,000 from 363,000 in July and an average of 342,000 a month over the past two years. Three other sharp one-month drops of over 50,000 multi-family starts have occurred in the last two years, Haughey says. "The August dip may be another occurrence of randomness in this very volatile sector - or it may be the real thing, an end to the housing boom. Serious economic troubles always hit the multi-family market first.”
A major concern is how last week's attack on America will affect not just the U.S. home building market, but the overall economy. A survey released yesterday indicated contractors were less optimistic about new home sales for the next six months, which would translate into a slowdown in new home starts and less building materials needed to be moved by truck.
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