The Official Online Weekly Newspaper of NAHB
Bouncing back from May, the dollar volume of commercial construction projects started in June was up 11%, according to McGraw-Hill Construction’s numbers released on July 22.
Total new construction was up 15%, including a slight 1% increase for residential building.
“The pattern of construction starts during the early months of 2011 showed a loss of momentum, due largely to renewed weakness for single-family housing combined with a pullback for public works and institutional building,” said Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction.
“June’s gain enables the average for this year’s second quarter to be down a modest 2% from the first quarter, a milder slowdown than what was being suggested by the data through May,” he said.
“The overall level of construction continues to be weak, but June’s gain is consistent with the sense that construction activity is hovering at a low level, rather than seeing further sustained declines.”
Nonresidential Building Figures
As in previous months, certain types of commercial projects fared better in June than others, according to McGraw-Hill.
Decliners in May that reversed course in June included amusement-related construction, up 90%; public buildings, up 89%; and hotel construction, up 55%.
June’s office and store construction starts also saw gains return, of 39% and 11%, respectively, and educational facilities were slightly back up by 4%.
Adding to the good news from May, warehouse construction continued to rise — by 30% — and health care facilities climbed another 16%.
Industry Spending and Employment
According to the U.S. Census Bureau, the value of construction put in place was estimated at a seasonally adjusted annual rate of $772.3 billion for June. This is a 0.2% increase from May but down 4.7% from June 2010.
For nonresidential construction specifically — including some nonbuilding construction — there was a 0.5% increase since May, but a 5.5% decrease since June 2010. Private nonresidential construction spending increased 1.8% between May and June, while public nonresidential construction declined 0.7% from May and was down a hefty 9.2% drop since last June.
According to the Associated General Contractors’ analysis of U.S. Bureau of Labor Statistics data, construction employment increased in 149 out of 337 metropolitan areas between June 2010 and June 2011, declined in 141 and stayed level in 47. AGC credits the growing private sector demand for construction with the increases.
“A lot of metro areas appear to be benefitting from growing demand from the private sector for new construction,” said Ken Simonson, the association’s chief economist. “Declining public sector demand is clearly taking a toll on just as many metro areas, however.”