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October Construction Jumps 12 Percent

By Mark S. Kuhar

The value of new construction starts advanced 12 percent in October to a seasonally adjusted annual rate of $469.8 billion, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. Much of the upward push came from nonresidential building, which was lifted by the start of a massive manufacturing project as well as by broader strengthening across several structure types. Also contributing to the total construction gain in October was a slight increase for the housing sector. Meanwhile, nonbuilding construction in October stayed even with its elevated September amount, helped by the start of several large electric power plants.

Highway and bridge construction in October pulled back 28 percent.

“After registering an up-and-down pattern during the first seven months of 2011, the construction start statistics from August through October have, on balance, shown improvement,” stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction.

Nonbuilding Construction
Nonbuilding construction in October was reported at $160.2 billion (annual rate), the same amount as September. The electric utility category continued to see robust activity, rising 35 percent in October.

The public works sector in October was mixed. The sewer and waste disposal category climbed 53 percent. Water supply construction in October increased 8 percent, while river/harbor development edged up 1 percent. Moving in the opposite direction, highway and bridge construction in October pulled back 28 percent from a strong September, resuming the downward trend for these project types. The miscellaneous public works category, which includes mass transit and site work, dropped 11 percent in October.

Nonresidential Building
Nonresidential building in October climbed 36 percent to $180 billion (annual rate). The manufacturing plant category soared 740 percent. Office construction in October also posted a large percentage gain, climbing 58 percent. Support for the office category came from the start of a $285 million office building in New York, which reached groundbreaking after being put on hold for the past couple of years.

Warehouse construction in October increased 34 percent, while hotel construction grew 4 percent. Store construction in October continued to languish, sliding 15 percent.

On the institutional side of the nonresidential market, the amusement-related category jumped 98 percent. Gains were also posted by the public buildings category (courthouses and detention facilities), up 39 percent; and churches, up 8 percent.

The largest institutional category, educational buildings, slipped 3 percent in October. Healthcare facilities retreated 8 percent. The transportation terminal category in October dropped 35 percent, following its heightened volume in September.

Residential Building
Residential building, at $129.7 billion (annual rate), grew 2 percent in October. Multifamily housing continues to be one of the brighter categories for construction in 2011, as it climbed 5 percent in October. Through the first 10 months of 2011, the top five metropolitan areas in terms of the dollar volume of multifamily starts were the following – New York , Washington D.C., Boston, Dallas-Ft. Worth, and Chicago.

Single family housing in October edged up 1 percent, and has seen very gradual upward movement after retreating during the first four months of this year.

During the January-October period of 2011, the regional pattern for single family housing showed this performance – the South Atlantic, no change; the South Central, down 3 percent; the West, down 4 percent; the Midwest, down 7 percent; and the Northeast, down 13 percent.