Tag Archives: construction growth

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May Construction Climbs 5 Percent

At a seasonally adjusted annual rate of $495.7 billion, new construction starts in May advanced 5 percent from the previous month, according to McGraw Hill Construction, a division of McGraw Hill Financial.  Much of the upward lift came from nonresidential building, which registered moderate growth for the second month in a row after its sluggish performance at the outset of 2013.  Smaller gains in May were reported for housing and nonbuilding construction (public works and electric utilities).  During the first five months of 2013, total construction starts on an unadjusted basis were reported at $187.6 billion, down 3 percent from the same period a year ago.  The 2013 year-to-date volume for total construction reflected a steep decline in the dollar amount for new electric utility projects relative to a robust first half of 2012.  If electric utilities are excluded, total construction starts would be up 10 percent year-to-date, helped in particular by the strengthened pace for housing.

May’s data raised the Dodge Index to 105 (2000=100), up from the 100 that was reported for April, and slightly above the average Index reading for all of 2012 at 101.  “The construction industry has shown modest improvement over the past year, helped by some project types while restrained by others,” stated Robert A. Murray, vice president of economic affairs for McGraw Hill Construction.  “The housing sector played a leading role last year in lifting overall construction activity, and while this year’s month-to-month gains have been smaller, housing continues to lead the hesitant construction expansion.  Nonresidential building has yet to provide much of a contribution, as tenuous gains for commercial building have been offset by further weakness for institutional building.  Still, the April and May pickup for nonresidential building could be a sign of more growth to come.  As for nonbuilding construction, the negative impact from the sequester has so far turned out to be less severe on the public works categories than anticipated.  However, new electric utility starts are in the midst of sharp decline from last year’s record amount, and the extent of that decline is limiting whatever gain may be possible this year for total construction.”

Nonresidential building in May grew 9 percent to $156.4 billion (annual rate), following its 6 percent rise in April.  For the commercial categories, stores and shopping centers are gathering momentum, with a 16 percent increase reported for May. Large retail projects that reached groundbreaking in May included a $60 million shopping center in Fresno, Calif. and the $52 million second phase of the City Point retail and residential complex in Brooklyn, N. York  New hotel construction starts soared 94% in May, boosted by the $415 million.

Office construction in May edged up 3 percent, following a substantial 58 percent jump in April.  Large projects in May that helped to keep office construction at its improved pace were the $250 million renovation of the International Monetary Fund Headquarters in Wash. D.C., the $200 million renovation to the United Nations General Assembly Building in New York, N. York, a $120 million office building in McLean, Virg. and a $113 expansion to a data center in Dallas, Tx.  Warehouse construction was the one commercial project type to retreat in May, sliding 7 percent, despite the start of a $100 million distribution facility in Edgerton, Ka.  The nonresidential building total was helped in May by a considerable gain for manufacturing plants, which jumped 70 percent with the start of a $378 million technology development center in Malta, N. York and a $110 million expansion to a healthcare products manufacturing plant in Athens, Ga.

The institutional categories in May showed a mixed pattern.  Educational facilities rebounded 10 percent after a weak April, helped by such projects as the $250 million expansion of the San Francisco Museum of Modern Art, a $91 million high school in Flower Mound, Tx. and a $67 million high school addition in Alexandria, Virg.  May included groundbreaking for 16 high school projects each with a construction start cost of $10 million or more. The public buildings category in May climbed 95 percent from a very depressed April, supported by the start of a $125 million detention facility in Redwood City, Calif.  However, healthcare facilities fell back 10 percent in May, despite the start of a $175 million hospital tower in Orlando, Flor.  Other declines were reported for amusement-related projects, down 17 percent; churches, down 27 percent; transportation terminals, down 33 percent.  The decline for transportation terminals came relative to a very strong April, and occurred despite the May start of several large airport terminal projects – a $229 million renovation of Terminal Five at Los Angeles International Airport, a $90 million gate replacement project at Fort Lauderdale International Airport, and a $75 million renovation for Terminal E at Dallas-Ft. Worth International Airport.

The first five months of 2012 featured an exceptional amount of large electric utility projects to reach the construction start stage, led by two nuclear projects – $8.5 billion for Units Three and Four at the Vogtle nuclear power facility in Georgia and $8.5 billion for Units Two and Three at the V.C. Summer nuclear power facility in South Carolina.  Additional large electric utility projects that reached the construction start stage in the first five months of 2012 included a $1.3 billion gas-fired power plant in Florida, a $1.1 billion gas-fired power plant in Virginia, and a $1.1 billion solar energy complex in California.  So far in 2013, the largest electric utility projects to reach the construction start stage are the $2.3 billion solar power facility in California and a $1.2 billion upgrade to a coal-fired generating plant in Kentucky.

Residential building in the first five months of 2013 advanced 32 percent compared to last year, reflecting similar gains for single family housing, up 32 percent; multifamily housing, up 30 percent.  Nonresidential building during this year’s first five months retreated 8 percent, due to a 13 percent drop for the institutional categories as well as a 20 percent decline for manufacturing plants.  Commercial building on a year-to-date basis registered a 2 percent gain from last year.

By geography, total construction starts during the first five months of 2013 featured gains in three regions – the West, up 10 percent; the Northeast, up 7 percent; and the South Central, up 6 percent.  Year-to-date shortfalls were reported for two regions – the Midwest, down 7 percent; and the South Atlantic, down 22 percent.  If electric utilities are excluded from the construction start statistics in the South Atlantic, that region would post a 23 percent year-to-date gain.

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CONSTRUCTION EMPLOYMENT INCREASEs BETWEEN APRIL AND MAY AS SECTOR ADDS JOBS IN 32 STATES

Construction employment increased in a majority of states in May, setting all-time highs in Louisiana and North Dakota, according to an analysis by the Associated General Contractors of America of Labor Department data. Association officials noted that construction demand remains very uneven and urged policy makers to expedite stalled public and private projects.

“The strongest recoveries in construction employment have occurred in states with oil and gas activity, while the steepest construction job losses have occurred in Sunbelt states,” said Ken Simonson, the association’s chief economist. “However, patterns for the past year show that even some lagging states are beginning to add jobs.”

Louisiana added 2,100 construction jobs in May and 11,800 over the past 12 months, topping the previous peak set in November 2008. North Dakota gained 800 jobs in May and 900 jobs in the past year, exceeding the mark set in September 2012.

For the month, 27 states experienced a lift in construction employment, while 20 states and the District of Columbia lost construction jobs. South Dakota had the largest one-month percentage gain (4.1 percent, 800), followed by Vermont (3.7 percent, 500), Arizona (3.6 percent, 4,400), Iowa (3.5 percent, 2,200) and Missouri (3.5 percent, 3,600). Arizona added the largest number of jobs for the month, followed by Ohio (3,900, 2.3 percent), Illinois (3,900, 2.2 percent) and Missouri. Employment was stable in Connecticut, Rhode Island and West Virginia.

Alaska had the steepest drop in construction employment from April to May (-7.8 percent, -1,400), followed by Nevada (-4.2 percent, -2,200). California lost the largest number of jobs between April and May (-8,500, -1.4 percent), followed by Florida (-7,500, -2.1 percent).

The latest job losses in Nevada brought the state’s construction employment to a level 66 percent below the peak set in June 2006. The next-largest drop in employment from peak levels was in Florida, where May 2013 employment was 50 percent below the June 2006 high-water mark. In spite of having added the most jobs of any state last month, Arizona’s construction employment remained 48 percent below its June 2006 peak.

Over the past 12 months, 32 states added construction jobs, 17 states and D.C. lost jobs and Idaho had no change. Texas added the most jobs (39,200, 6.7 percent), closely followed by California (38,500, 6.6 percent). Arizona had the steepest percentage increase (10.4 percent) and third highest total gain (11,900), followed in both categories by Louisiana (9.4 percent, 11,800). Despite its strong one-month job gains, Illinois lost the most jobs over the past year (-6,200, -3.3 percent), followed by North Carolina (-6,000, -3.5 percent). Montana had the highest year-over-year percentage drop (-9.7 percent, -2,300), followed by Rhode Island (-6.3 percent, -1,000).

Association officials said the wide range of job gains and losses show the need to adequately fund infrastructure investments and remove regulatory barriers to private investment. They urged policy makers in Washington to move ahead with overdue reauthorization of the Water Resources Development Act and the Keystone XL pipeline, among many other projects. “We need measures that will strengthen the economy and help the construction industry continue to add jobs,” said Stephen E. Sandherr, the association’s chief executive officer.