Increase in Construction Costs Forecast Bad For Florida Rock
Yaser Anwar, CSC of Equity Investment Advisors
Dallas-based The Turner Corp., the nation's leading general builder, announced on June 16 that construction costs in the second quarter of 2006 are projected to increase over the first quarter of 2006. According to the Turner Building Cost Index, the second-quarter 2006 index will rise to 787, showing a 2.75-percent increase over the first quarter 2006 index of 766 and a 11.89-percent increase over the second quarter 2005 index of 704. Turner has made its quarterly forecast for more than 50 years.
According to Karl F. Almstead, the Turner vice president responsible for the Cost Index: "The upward cost pressure from commodities such as cement, aluminum, copper, asphalt, and hydrocarbon energy due to domestic and global demand are driving up concrete, masonry, curtainwall, mechanical, electrical, and paving pricing.
Markets with significant volumes of available work continue to stretch the local labor and subcontractor resources."This may be a good opportunity to monitor short positions on builders such as Florida Rock(FRK). Housing has been one of the major employment creators, and with increase in costs, they will have to downsize, which reflects negatively on the economic environment.
http://www.equityinvestmentideas.blogspot.com/
Dallas-based The Turner Corp., the nation's leading general builder, announced on June 16 that construction costs in the second quarter of 2006 are projected to increase over the first quarter of 2006. According to the Turner Building Cost Index, the second-quarter 2006 index will rise to 787, showing a 2.75-percent increase over the first quarter 2006 index of 766 and a 11.89-percent increase over the second quarter 2005 index of 704. Turner has made its quarterly forecast for more than 50 years.
According to Karl F. Almstead, the Turner vice president responsible for the Cost Index: "The upward cost pressure from commodities such as cement, aluminum, copper, asphalt, and hydrocarbon energy due to domestic and global demand are driving up concrete, masonry, curtainwall, mechanical, electrical, and paving pricing.
Markets with significant volumes of available work continue to stretch the local labor and subcontractor resources."This may be a good opportunity to monitor short positions on builders such as Florida Rock(FRK). Housing has been one of the major employment creators, and with increase in costs, they will have to downsize, which reflects negatively on the economic environment.
http://www.equityinvestmentideas.blogspot.com/
posted by douglas mcintyre at 5:40 PM
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