PEPT Essay Example | Topics and Well Written Essays - 1000 words

PEPT - Essay Example This economic indicator is very important for Able Corporation because it includes prefabricated and modular housing; mobile homes are also included, but are treated separately. Hotels, motels, nursing homes, dormitories, and conversions are excluded. For multiunit buildings (e.g., apartments and condominiums), construction on all units is considered to begin on the same day. The totals are adjusted to reflect the time lag between permit issuance and the actual start of construction and the number of projects that are canceled after permit issuance. The factors used to perform these scaling and adjustments are produced by surveys of sites, owners of sampled buildings, and local panels of persons knowledgeable about new construction (Rogers 1994). The main limitation of this forecast is that annual housing start statistics have varied from 2 million during a strong rebound to 850,000 during an economic downturn. As the American population increases, the average number of housing starts during a normal economic growth period also increases. Under current conditions an annual housing start rate of about 1.2 million indicates a modestly growing economy. Another economic indicator is expenditures for residential construction. ... It is closely tied to and responsive to interest rates. Residential construction is estimated by adjusting the data reported by the F. W. Dodge Division of the McGraw-Hill Information Systems Company for additional costs not covered by the Dodge estimates, projects not covered by the survey, and geographical areas not covered (Tainer 1993). Researchers admit that in some cases, statistical results can be incomplete or inaccurate which create problems for such industries as PEPT. There are several weaknesses in the monthly figure that limit its usefulness as both a general economic indicator and an indicator of consumer activity. Residential construction tends to be volatile due to weather, fashion, and other unpredictable factors. Expenditures for commercial construction are estimated from progress reports solicited from a sample of such projects. The monthly values derived are converted to constant dollars by applying different cost indexes that have been derived for each category of construction. These indices are used in short-term cyclical and long-term growth analyses, used to estimate the current volume of the economic activity in this segment of the U.S. economy, and have an important impact on employment in the construction and building-materials industries and on additions to capital stocks of structures in the private and public sectors. Still, critics admit that there are major changes occurring in the automobile industry that diminish the significance of these periodic reports as a forecasting tool. The forth tool is expenditures for home repairs and improvement. A sample of home repairs and improvement representing