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Chilly autumn.

A slowdown appears to be in the works for several construction segments, as overall August construction starts dropped 4 percent from the previous month, according to figures compiled by The McGraw-Hill Cos., New York.

The trend appeared to continue into September, as single-family housing starts slowed by six percent for the month. However, U.S. Commerce Department data also showed an uptick in new residential building permits, which could indicate a rebound.

September Commerce Department numbers were gloomy, though, with the West and the Northeast showing double-digit drops in new housing starts.

For the overall construction industry, the retreat to an annual rate of $573.3 billion was because of a slower pace in all three segments: nonresidential building, residential construction and infrastructure or non-building construction.

Even with the August slowdown, overall industry numbers are still historically strong, according to Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction.

"Total construction continues to move at a healthy pace, and it's now virtually certain that full year growth for 2004 will exceed the 5 percent gain in 2003." Single-family housing will need to remain strong, "as tight fiscal conditions over the past several years continue to have a restraining influence on the institutional structure types and public works construction," according to Murray.

Infrastructure construction in August fell 2 percent to $100.1 billion. On the plus side, highways and bridges had a strong August, with respective gains of 11 percent and 25 percent.

Helping to boost the bridge total in August were the start of major renovation projects in Houston ($175 million) and New York City ($137 million). While August was relatively strong for transportation-related work, the broader trend during 2004 has been downward, with the first eight months of 2004 showing a 2 percent decline for highways and a 16 percent decline for bridges. "Uncertainty related to when a new federal transportation bill will be passed has played a role in dampening this year's highway and bridge construction starts," notes Murray.

The commercial building segments in August fell 7 percent in new contract values, with retail stores down 4 percent, warehouses down 7 percent, offices down 14 percent, and hotels down 32 percent.

July office numbers were boosted by the $800 million related to the start of the Freedom Tower in lower Manhattan. If this project is excluded from July statistics, new office starts in August would be up 37 percent, as large office projects reaching the groundbreaking stage that month included the $400 million headquarters for the New York Times in midtown Manhattan and an $80 million federal office building in Chicago.

A 10 percent overall gain for total construction during the January-August period of 2004 reflected this pattern by sector: residential building, up 18 percent; nonresidential building, up 2 percent; and infrastructure construction, up 1 percent.
U.S. CONSTRUCTION CONTRACT VALUES

 % Change

Residential +18% $221.8 * $187.3 *
Non-Resid. Const. +2% $108.7 * $106.7 *
Infrastructure +1% $63.8 * $63.0 *
Total +10% $394.3 * $357.0 *

* in billions

Source: McGraw-Hill Construction Dodge
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Title Annotation:Back Page
Publication:Construction & Demolition Recycling
Geographic Code:1USA
Date:Nov 1, 2004
Words:507
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