Late rebound.

The commercial and infrastructure construction segments are providing a lift to the overall construction industry, marking a role reversal from most of the past two or three years. According to October 2004 figures for future construction contracts calculated by McGraw-Hill Construction, Lexington, Mass., overall new construction starts increased 4 percent in October versus September (on a seasonally adjusted basis), with nonresidential and infrastructure construction gaining while the residential sector fell slightly.

The first 10 months of 2004 witnessed total construction on an unadjusted basis check in at $495 billion, up 9 percent from the same period in 2003. "October showed the pattern that's expected to become more common during 2005, that being expansion will come increasingly from nonresidential building, following the leading role played by homebuilding over the past four years," says Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. "October had the added benefit of improved contracting for public works, which in a broader time frame continues to be dampened by tight fiscal conditions for the federal and state governments."

An 11 percent jump in non-residential building was boosted by across-the-board gains in several non-residential structure types, led by a 58 percent increase for offices. The office category was supported by the start of the $635 million One Bryant Park office complex in Manhattan, as well as groundbreaking for a $160 million project in West Des Moines, Iowa, and a $90 million project in Kansas City, Mo.

During the first 10 months of 2004, the dollar volume of office construction was up 14 percent compared to 2003. Among the other commercial construction segments showed improvement in October were: warehouses, up 3 percent; retail, up 5 percent; and hotels, up 18 percent. For the first 10 months of 2004, retail construction was up 4 percent, warehouses up 8 percent, and hotels up 14 percent. On the negative side, manufacturing plant construction in October retreated 41 percent from a September that included the start of large projects in the biotech and automotive industries.

On the institutional side of the non-residential market, school construction was up 16 percent in October, following a slow September. Growth was also reported for amusement-related projects, up 18 percent, and health care facilities, up 21 percent. Among the declining categories were churches, down 7 percent, and public buildings (courthouses and detention facilities), down 25 percent.

Infrastructure or "non-building" construction, improved 11 percent in October relative to September. Highway and bridge construction improved 12 percent.

U.S. CONSTRUCTION CONTRACT VALUES

                     Jan.-Oct. 2004    Jan.-Oct. 2003    % Change

Residential              $279 *              $240 *          +16%
Non-Resid. Const.        $137 *              $133 *          +3%
Infrastructure           $79 *               $80 *           0%
Total                    $495 *              $453 *          +9%

* in billions

Source: McGraw-Hill Construction

Note: Table made from bar graph.