Residential starts dropped in the 3rd quarter. The situation with non-residential starts is even worse. These starts dropped to an unprecedented low level in the 2nd quarter of 2000, and remained low in the 3rd. The weakness in non-residential construction may itself be connected to the unbalanced growth. Just as the hi-tech sector creates more output than it does employment, it also has relatively little need for construction, compared to, say, industry and the hotel sector.
Residential construction is a function of demand for housing.
Latest data point to continuing weakness in this demand. The weakness in demand is well reflected in price developments. Next to tourism, construction was the one sector expected to be affected negatively by the unrest. In addition, the unrest is expected to have a further dampening effect on demand. Specials Support Israel's soldiers in their time of need.