Sales of construction equipment by the world’s 50 largest manufacturers grew 25 percent last year to $182 billion, according to the annual Yellow Table survey by KHL Group. This was a record for the industry, surpassing the previous high of $168 billion set in 2008, prior to the global financial crisis.
The Yellow Table, which is a ranking of the world’s 50 largest construction equipment manufacturers, saw relatively few changes at the top of the table, with the industry’s long-standing number one and two, Caterpillar and Komatsu, continuing to hold the positions they have had for more than a decade.
Climbers inside the top 10 include Volvo Construction Equipment, Terex, John Deere, and China’s Sany and Zoomlion. These gains came at the expense of Hitachi Construction Machinery, although its revenues were within 0.5 percent of Volvo, the company directly above it, according to the company; and South Korean Doosan Infracore. China-based XCMG fell out of the top 10, having held tenth place for two years.
Across the top 50, U.S.-headquartered companies accounted for 31.2 percent of total revenues, up from 29.5 percent the previous year. It was followed by Japan with a 23.2 percent share, down from 23.5 percent the previous year, and China, which had a 16.9 percent share, up from 15.0 percent in the 2011 edition of the Yellow Table (based on 2010 revenues).
China’s construction equipment manufacturers have seen their share of the top 50’s revenues climb for six consecutive years. Over the last decade, their share has increased more than ten-fold in percentage terms. In 2003, the first year the yellow table was published, China’s manufacturers had a share of just 1.6 percent, worth just $841 million. Today their 16 percent share is worth $30.6 billion.
The report’s author, Chris Sleight, said, “A rebound in the European, North American and Japanese construction markets was the key driver last year. There was also growth for some of China’s larger players, but they faced the first significant headwinds for more than a decade as the country’s stimulus spending programs came to an end. Over the next 12 months the continued recovery in North America is likely to be decisive for the 2013 Yellow Table.”
New construction starts in March jumped 23 percent to a seasonally adjusted annual rate of $482.4 billion, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. The increase came as the result of a sharp gain for electric utility construction, lifted in particular by work at a nuclear power plant facility in Georgia. Meanwhile, public works construction and housing showed modest improvement in March, but nonresidential building lost further momentum.
For the first three months of 2012, the amount of total construction starts on an unadjusted basis was reported at $94.2 billion, down 3 percent from a year ago. For the 12 months ending March 2012 versus the 12 months ending March 2011, total construction starts were basically unchanged.
“Aside from the lift coming from electric utilities, the March statistics show that construction activity continues to hover within a set range, with gains for some project types being offset by weakness for other project types,” said Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. “On balance, the construction industry can still be viewed as struggling to see renewed expansion take hold in a sustained and broad-based manner.”
Nonbuilding construction in March soared 79 percent to $212.9 billion (annual rate). Electric utility construction advanced 249 percent, led by the $8.5 billion for work at the Vogtle facility in Georgia. March featured the start of several noteworthy alternative energy projects. These included five large wind power facilities located in Kansas ($783 million), Montana ($300 million), Illinois ($135 million), Oklahoma ($110 million) and Massachusetts ($90 million).
The public works sector in March grew 4 percent, helped by a 27 percent rebound for highway construction after an especially weak February. The trend for highway construction remains downward, however, as March contracting came in 12 percent below this category’s average monthly pace during 2011. Water supply construction was another public works category that rebounded after a weak February, rising 59 percent. The other public works categories retreated in March, with sewer construction down 1 percent, bridge construction down 11 percent, river/harbor development down 15 percent, and miscellaneous public works (site work, mass transit, pipelines, etc.) down 28 percent.
Residential building, at $146.7 billion (annual rate), grew 2 percent in March, maintaining the gradual if hesitant upward trend that’s been present since the second half of last year. Multifamily housing in March increased 5 percent. Single-family housing in March edged up 1 percent, regaining some strength after slipping back in the previous two months. Compared to their average monthly pace for all of 2011, multifamily housing in March was up 13 percent while single-family housing was up 16 percent.
Nonresidential building in March fell 4 percent to $122.8 billion (annual rate). The institutional building sector dropped 7 percent, due to weaker activity for a majority of its structure types. Healthcare facilities in March fell 30 percent; the amusement-related category dropped 21 percent and churches also witnessed a 21 percent decline. Transportation terminal work in March slipped 9 percent, while the public buildings category was unchanged.
Nonbuilding construction during the first three months of 2012 managed a 2 percent gain, as a 38 percent increase for electric utilities outweighed a 16 percent drop for public works. Residential building during the first three months of 2012 climbed 21 percent, featuring year-to-date growth for both sides of the housing market – single family housing up 22 percent and multifamily housing up 17 percent.
By geography, total construction during the first three months of 2012 showed declines in three regions – the South Central, down 23 percent; the West, down 22 percent; and the Northeast, down 13 percent. Year-to-date gains for total construction were reported in the Midwest, up 6 percent; and the South Atlantic, up 54 percent.
The U.S. Census Bureau of the Department of Commerce reported that construction spending during February 2012 was estimated at a seasonally adjusted annual rate of $808.9 billion, 1.1 percent (±1.3 percent) below the revised January estimate of $818.1 billion. The February figure is 5.8 percent (±1.8 percent) above the February 2011 estimate of $764.2 billion. During the first two months of this year, construction spending amounted to $111.3 billion, 7.4 percent (±1.6 percent) above the $103.7 billion for the same period in 2011.
Spending on private construction was at a seasonally adjusted annual rate of $527.3 billion, 0.8 percent (±1.1 percent) below the revised January estimate of $531.7 billion. Residential construction was at a seasonally adjusted annual rate of $246.5 billion in February, nearly the same as (±1.3 percent) the revised January estimate of $246.4 billion. Nonresidential construction was at a seasonally adjusted annual rate of $280.8 billion in February, 1.6 percent (±1.1 percent) below the revised January estimate of $285.3 billion.
In February, the estimated seasonally adjusted annual rate of public construction spending was $281.6 billion, 1.7 percent (±1.8 percent) below the revised January estimate of $286.4 billion. Educational construction was at a seasonally adjusted annual rate of $69.4 billion, 2.5 percent (±3.5 percent) below the revised January estimate of $71.2 billion. Highway construction was at a seasonally adjusted annual rate of $79.4 billion, 2.6 percent (±5.1 percent) below the revised January estimate of $81.5 billion.
New Home Construction
Sales of newly built, single-family homes slowed 1.6 percent to a seasonally adjusted annual rate of 313,000 units in February, according to data jointly released by HUD and the U.S. Commerce Department.
“While many builders are seeing more traffic through their model homes as the spring buying season gets underway, tight lending conditions and appraisal issues continue to pose significant obstacles to prospective purchasers,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “These hurdles are definitely slowing the momentum of the housing and economic recovery.”
“To some extent, we believe that exceptionally good weather conditions in December helped pull some home sales forward that would otherwise have occurred in January and February, which partially accounts for the declines we’ve seen at the beginning of this year,” said NAHB Chief Economist David Crowe. “However, the February sales rate is still 11.4 percent above its year-ago level, and the quarterly average sales pace is at a two-year high. Meanwhile, the inventory of new homes for sale remains at an all-time record low, in part because of the lack of available financing for new-home production.”
Crowe also noted that the sales report indicated greater buying activity in the above-$200,000 range in February. This suggests that those who have higher incomes and can more easily qualify for a mortgage are the ones who are moving forward with a home purchase, while first-timers who are looking in the lower price ranges may be having a tougher time getting qualified, he said.
Regionally, new-home sales increased 14.3 percent in the Northeast and 8.0 percent in the West, but declined 2.4 percent in the Midwest and 7.2 percent in the South in February. Meanwhile, the inventory of new homes for sale held unchanged at a record low of 150,000 units in February.
Single-family housing production held virtually unchanged in March as a double-digit decline in the more volatile multifamily sector brought combined nationwide starts activity down 5.8 percent to a seasonally adjusted annual rate of 654,000 units, according to data released by the U.S. Commerce Department today.
“While more consumers appear to be seriously considering a new-home purchase, builders remain very cautious about starting new projects until they see more actual sales materializing,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “At the same time, in places where buyers are ready to go forward with a purchase, access to credit for both builders and buyers and difficulties in obtaining accurate appraisals are persistent challenges that continue to slow that process considerably.”
“While combined U.S. housing starts lost some ground in March, this was almost entirely due to typical month-to-month volatility on the multifamily side,” said NAHB Chief Economist David Crowe. “The fact is that single-family and multifamily starts and permits were all stronger in the first quarter of 2012 than they were in the fourth quarter of 2011, indicating that the market continues to slowly strengthen, albeit in fits and starts.”
The 5.8 percent decline in overall housing starts in March was mostly due to a 16.9 percent decline on the multifamily side, which brought that sector’s annual production pace to 192,000 units, seasonally adjusted. Meanwhile, single-family starts held virtually flat for the month with a 0.2 percent decline to 462,000 units.
Regionally, while the South registered a 15.9 percent decline in combined starts activity in March, the Northeast posted a 32.8 percent gain, the Midwest posted a 1.0 percent increase and the West reported no change in the pace of new housing production for the month.
Permit issuance, which can be an indicator of future building activity, gained 4.5 percent to a seasonally adjusted annual rate of 747,000 units in March – the fastest pace since September of 2008. This gain was due to a 20.8 percent increase on the multifamily side to 285,000 units, while single-family permit issuance declined 3.5 percent to 462,000 units.
Regionally, permit issuance gained 23.4 percent in the West, 1.7 percent in the Midwest and 0.3 percent in the South, but fell 6.0 percent in the Northeast this March.