By Mark S. Kuhar
New construction starts in April were reported at a seasonally adjusted annual rate of $400.2 billion, basically the same amount as March, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies.
Nonresidential building slipped back after its elevated March pace, while nonbuilding construction (public works and electric utilities) continued to retreat. In contrast, residential building in April registered a moderate gain, helped by upward movement for multifamily housing. During the first four months of 2011, total construction on an unadjusted basis came in at $122.1 billion, down 9 percent from the same period of 2010.
An Economic Look
“The pattern of construction starts has been essentially flat within a broad range for about two years now, and the past three months have come in towards the lower end of that range,” said Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction.
“There have been a few positive signs in recent months, such as the strengthening trend shown by multifamily housing and the pickup for manufacturing plants. However, single family housing remains stalled, and the tough fiscal environment continues to dampen the prospects for institutional building and public works, even with the occasional support coming from large projects such as took place during April. More and more, it’s looking like the best that can be expected this year for the overall level of construction starts is flat activity.”
- Nonbuilding construction, at $116.5 billion (annual rate), dropped 3 percent in April. Much of the downward pull came from a slower pace for electric utilities, which fell 31 percent from March, as this category continued to retreat from its exceptional February amount. Highway and bridge construction in April climbed 5 percent, aided by the start of a $357 million reconstruction project on I-95 in New Haven, Conn. The miscellaneous public works category, which includes diverse project types, rose 10 percent in April with help from the start of a $150 million automotive racetrack in Austin, Texas.
- Residential building in April grew 4 percent to $123.5 billion (annual rate). Multifamily housing in April climbed 43 percent, continuing the up-and-down pattern around a rising trend that has been present since late 2010 and into early 2011.
- Nonresidential building in April dropped 2 percent to $160.2 billion (annual rate), down slightly after the 26 percent gain reported for March. Much of April’s decreased contracting came from the commercial and industrial structure types.
The 9 percent decline for total construction on an unadjusted basis for the first four months of 2011 compared to last year was the result of weaker activity for all three main sectors. Nonresidential building dropped 7 percent year-to-date, due to this behavior – commercial building, up 19 percent; manufacturing building, up 209 percent; and institutional building, down 23 percent. Nonbuilding construction was down 5 percent year-to-date, with the public works categories sliding 25 percent while electric utility work climbed 154 percent. Residential building showed the largest year-to-date decline of the three main sectors, falling 15 percent, with the comparison to the early months of 2010 when housing activity was recovering prior to its midyear stall.
By geography, total construction in the first four months of 2011 registered this pattern – the South Atlantic, down 19 percent; the Northeast, down 13 percent; the Midwest, down 11 percent; the South Central, down 2 percent; and the West, no change.
Additional perspective comes from looking at 12-month moving totals, in this case the 12 months ending April 2011 versus the twelve months ending April 2010. On this basis, total construction is down 5 percent, as the result of this performance by sector – nonresidential building, down 5 percent; residential building, down 7 percent; and nonbuilding construction, down 2 percent.
By region, the 12 months ending April 2011 showed the following for total construction compared to the previous 12 months – the South Atlantic, down 16 percent; the Northeast, down 6 percent; the South Central, down 4 percent; the Midwest, no change; and the West, up 2 percent.