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State Construction Expected to Decline From 1988 Activity

February 26, 1989

Construction in the state was up in 1988 but will be down this year, according to the Construction Industry Research Board.

In 1988, construction totaled $44.88 billion, up 11.6% from 1987, adjusted for inflation. The 1989 forecast is for a decline of 12.5%, to $39.26 billion.

The board said the 1988 increase was due, in part, to several large projects in the nonresidential and heavy construction sectors and high housing permit activity in areas where growth-control measures appeared on election ballots.

The predicted decline in 1989 is seen as an adjustment following "unusually high" 1988 activity and as a reflection of anticipated increases in interest rates. Additionally, sewer capacity shortages in the Los Angeles area will restrict building.

Construction employment averaged 607,000 in 1988, up 5.6% from 1987. A 0.5% is foreseen for 1989, mainly because of the time lag between building permit issuance, or contract award.

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