Corporate News

Wednesday, June 2, 2010

Economy Watch: Construction Spending Surges in April

Construction spending unexpectedly spiked 2.7 percent in April compared with March, according to the U.S. Department of Commerce on Tuesday. That was the largest monthly increase since the summer of 2000, a year of prosperity that?s hard to remember. The question for 2010 is whether this is a temporary bump of no lasting impact, or just maybe the beginning of some kind of recovery in construction.

Private investment in construction, which has been in the doldrums for quite a while, grew 2.9 percent, led by an increase in home construction spurred by the federal tax credit. But private nonresidential construction was up too, by 1.7 percent, the largest increase since before the panic of 2008.

The federal stimulus, which was intended to be a multiyear effort, also helped increase construction activity in April. Federal spending on construction rose 2.9 percent, and state and local spending?much of which was actually federal money, since states and localities are notoriously short of cash these days?rose 2.3 percent.

CitiFinancial Contracts North American Operations

This is a story that rings of 2008: CitiFinancial, the consumer finance arm of Citigroup, is axing 330 branches nationwide and some 500 to 600 jobs. In Canada, the company plans to close 46 branches and fire 120 employees.

The move is part of a larger restructuring effort by CitiFinancial, which will eventually be spilt in two. Going forward, one part will do loan modifications and loan restructuring, while the other will offer personal and home-equity loans.

Eventually, these pieces of CitiFinancial will be offered for sale; the branch closures are thus a kind of pre-sale housecleaning. Thus far, however, CitiFinancial hasn?t said which of its branches will close, nor what the new entities? names will be.

NRC and Excell Team Up to Market Residential RE

Even as some companies contract, others are expanding?or at least making strategic partnerships?anticipating the day when the economy is a lot stronger than it is. One such recently struck partnership is between Chicago-based NRC Realty & Capital Advisors L.L.C. (NRC) and the Excell Group Inc., to sell residential real estate in Washington state and Oregon. NRC has a national marketing platform, while Excell has regional expertise, according to the companies.

Since its founding about 20 years ago, NRC has sold more than 10,000 residential and commercial properties for institutional and governmental clients. Excell Group?s clients have included large public companies, but also small-to-medium-size privately held builders and developers.

?The Pacific Northwest provides opportunities for companies that can deliver results,? said Evan Gladstone, executive managing director of NRC, told CPE. ?The Excell Group, with its extensive knowledge in the market, is the ideal partner for NRC to expand its footprint in the region.?

Wall Street moved all over the map on Tuesday but ended down. The Dow Jones Industrial Average lost 112.61 points, or 1.11 percent, while the S&P gave up 1.72 percent and the Nasdaq was down 1.54 percent.