Construction News Business Report
Friday, August 18, 2006
On Tuesday August 8th, the Federal Reserve decided not to raise interest rates for the first time in 2 years. It left the door open for future rate hikes down the road but felt the economy was cooling and inflation was in check. Higher oil prices and the slowdown in the housing market had the greatest affect on the decision.
This could be significant news for the construction and remodeling industries.
While it sounds great that they're not raising rates, their pause could be an indication that an economic downturn has already started.
In other important real estate news, housing starts were down 2.5% in July. While it might not seem like much, it is the 5th decline in the last six months. Even scarier, building permits were also down by a whopping 6.5% (the 6th straight decline and largest drop since September 1999.) These numbers all mean that the housing market is rolling over. Some are predicting that housing starts could be off by 20% and building permits off by 25% by the end of the year.
This data means that there will be less new home construction throughout the rest of 2006. Building companies may turn their attention to remodeling to generate revenue. Also, the depth of the bursting housing bubble has many homeowners running scared. They will be less inclined to take on new construction or remodeling projects. Even if interest rates stay level or drop, the consumer confidence level is down. It might take the rest of this year and all of next year to recover, no matter what the Fed does with rates. Stayed tuned to ConstructionDeal.com for developing news that
affects your business.
Source: MarketWatch - U.S. housing starts fall 2.5% in July
Save Your Business Money
Thursday, August 17, 2006
With the economy slowing down and the rising costs of doing business, it's important to save money where you can. Every business exists to make money and you can either increase revenue and/or cut costs to do it. Your company can make minor changes that can add up to big savings. Keep a close watch on energy consumption. Maintain your vehicles - keep tire pressure up, get tune-ups on a regular basis, and change the oil. Make your office or showroom more efficient - bump up the thermostat to 78 or 80 degrees; replace regular bulbs with fluorescent lighting; and update your appliances with new Energy Star ones.
Use faxes and emails instead of regular mail when you can – it costs less.
Many have expensive 800 numbers - you can save a lot of money using voice-over internet providers (VoIP) which can save on long distance, site-to-site calls, and voicemail (consider VoiceStick, Vonage or Packet 8.)
It might also be a great time to consider shopping around for better insurance prices. Rates always vary from every company so check and see what options you have. You don't want to give up any premium service - you want them there for you when you need them - but there are many options to choose from that can save you money. Try an independent agent who can shop around to get you the best price. Raising a deductible can lower premiums.
Ask suppliers if they give discounts for early payment. If not, pay your bills as late as possible without incurring a fee. The longer your money is under your control the longer it's earning a return for you rather than someone else.
