“The construction industry remains soft and a drag on the economy,” saidNational Federation of Independent BusinessChief EconomistWilliam Dunkelberg, referring to information gathered for the group’s July Index of Small Business Optimism. Over the past few months, only 7 percent of construction firms increased inventories, while 24 percent reported reductions. Only 4 percent plan increases in the third quarter compared to 19 percent that plan inventory reductions.
more owners in the construction industry plan to expand employment (19 percent)
than plan reductions (12 percent). Thirteen percent reported cutting
average selling prices, but 48 percent reported price hikes in spite of overall
weakness in construction activities. Inflation (on the input or cost side)
was the No. 1 problem facing construction firm owners. Even with the price
hikes, 45 percent of the owners reported lower earnings, quarter over quarter,
compared to 18 percent reporting gains.
The NFIB index fell one point
to 88.2 in July, establishing one of the longest strings of recession-level
readings in the history of the survey. Half of the decline was due to
weaker capital spending plans - the lowest reading since 1975. Lower
earnings, fewer job openings and lower inventory satisfaction also posted
substantial declines, but those were mostly offset by gains in expected real
sales, business conditions and the percent of owners saying this is a good time