Building Down

One universal prediction at the outset of 1930 was that construction, long low, would zoom under the impetus of cheap money and the many Hoover-pleas. Last week were published figures indicating that the long-awaited zoom will have to be a terrific one the next six months if 1930 is to be known as a good construction year.

F. W. Dodge Corp., building statisticians and trade-paper publishers, announced that in 37 States east of the Rockies new contracts during July were down 39% from June, 44% from July a year ago, while the decline for the first seven months was 22%. McGraw-Hill's Engineering News-Record reported that engineering construction has suffered 17% through the country as a whole. New England alone maintains last year's level; the Midwest has suffered the most with a 42% decline.

Far worse, however, would construction be but for the President's efforts. Over many years, public works have averaged 40% of engineering construction. July found this type of work accounting for 53% of the total. For the first seven months, the proportion was 41.3% against 31.2% last year, 37% in 1928. Street and road contracts for the first seven months showed a 21% gain.

Bearish in the situation is unemployment in the building trades, now estimated at 37% against 16% last year. But a bullish sign is that while most building material is moving slowly, shipments of cement and fabricated steel have been nearly equal to last year.

Chief reason for the decline in construction is that money, while cheaper for many purposes, has not been diverted back into mortgages as predicted. Interest rates on first mortgages are still 52% to 6% while seconds must yield at least 7%. Yields on 15 private building bond issues during June averaged 6.2%. Banks and building & loan societies are reported to be loaded up with property acquired through foreclosure, the construction field is considered "overbuilt" except for special buildings.

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