June Construction Retreats One Percent
- Published: Friday, 17 August 2012 18:51
By Mark S. Kuhar
New construction starts in June slipped 1 percent to a seasonally adjusted annual rate of $446.1 billion, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies.
After the elevated activity that was reported during March and April, which reflected the lift coming from two nuclear power projects, total construction in May and June returned to a level just slightly above the average monthly pace reported during the previous year. June featured a moderate loss of momentum for nonresidential building, after this sector’s improved performance in May.
At the same time, residential building in June maintained its gradual upward trend, while nonbuilding construction was unchanged as the result of divergent behavior by its public works and electric utility segments. For the first six months of 2012, total construction starts on an unadjusted basis came in at $225.0 billion, up 4 percent from the same period a year ago.
The 4 percent gain for total construction starts at the U.S. level during the first six months of 2012 was due to a varied pattern by geography. The South Atlantic region advanced 50 percent year-to-date, lifted by work at the nuclear power facilities in Georgia and South Carolina. Total construction starts in the Midwest were up 6 percent, but year-to-date declines were reported in the West, down 9 percent; and in the South Central and Northeast, each down 10 percent.
Public works construction climbed 26 percent in June, led by a 129 percent surge for the “other public works” category, which includes such diverse project types as site work, mass transit, pipelines, and outdoor sports stadiums.
Bridge construction in June climbed 25 percent, while highway construction in June improved 3 percent. The environmental public works categories in June showed the following performance – river/harbor development, up 3 percent; sewers, unchanged; and water supply systems, down 10 percent.
For the first six months of 2012, nonbuilding construction was up 11 percent compared to last year. The electric utility category grew 30 percent year-to-date. Public works construction registered a 1 percent year-to-date gain, due mostly to a 58 percent jump for the “other public works” category from its depressed amount during the first half of 2011.
Modest 2012 year-to-date gains were reported for bridges and sewer construction, each up 2 percent. Decreased year-to-date activity was reported for highways, down 12 percent; accompanied by declines for water supply systems, down 10 percent; and river/harbor development, down 15 percent.
Nonresidential building in June fell 4 percent to $148.7 billion (annual rate), following its 12 percent increase in May. For the commercial sector, office construction in June dropped 31 percent after jumping 34 percent in May, which benefitted from the start of several large data center and corporate headquarters projects.
The June pace for both sides of the housing market were considerably above their respective monthly averages during 2011, with multifamily housing up 45 percent and single family housing up 26 percent on this basis. At the six-month mark of 2012, residential building in dollar terms advanced 25 percent from the first half of 2011, with multifamily housing climbing 32 percent while single-family housing grew 23 percent.
The top five multifamily markets by metropolitan area during the first half of 2012 ranked by the dollar amount of new projects, were the following (with the percent change from a year ago) – New York, up 88 percent; Washington, D.C., down 19 percent; Los Angeles, up 27 percent; Dallas-Ft. Worth, up 40 percent; and Boston, up 14 percent.
For single family housing, the year-to-date gains were widespread by geography, with all five major regions of the U.S. reporting double-digit increases relative to a year ago – the West, up 32 percent; the Midwest, up 26 percent; the South Atlantic, up 21 percent; the South Central, up 20 percent; and the Northeast, up 12 percent.