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In June, construction contracting jumps 13%.

Bouncing back strongly, contracting for new construction climbed 13 percent in June, it was reported by the F.W. Dodge division of McGraw-Hill. The latest month's gain lifted the seasonally adjusted Dodge Index to 104 (1987 = 100), surpassing 1993's previous high of 103 reached in January.

June's increase resulted from sharp improvement for nonresidential and non-building construction, while the residential sector saw more subdued expansion. Playing a significant role in the month's gain were the start of four large projects -- two convention centers and two power plants. If these projects are excluded, the total construction advance for June would have been a moderate 4 percent.

Non-residential building in June surged 24 percent over its weak May amount, led by the convention center projects (in Chicago and Atlantic City) which accounted for half the month's non-residential rise. Other categories also advanced, including a welcome rebound for educational building from its sluggish May. Meanwhile, stores and shopping centers maintained the relatively healthy volume of recent months, and even offices and manufacturing building managed to edge upward from their persistently dismal status.

Non-building construction grew 18 percent in June, boosted by power plant projects in Rhode Island and North Carolina. Contracting for public works (nonbuilding minus utilities) stayed relatively unchanged, reflecting an offsetting pattern for its various categories. Although highways and bridges retreated, a strengthened volume of sewer and water resource projects picked up the slack.

Residential construction registered a comparatively small increase in June, rising just 3 percent. Single-family housing was essentially unchanged, so the bulk of June's gain came from the multifamily sector in a brief upturn from its chronically depressed condition.

At 1993's midpoint, total construction was holding onto a 2 percent lead over the first six months of last year, supported by nonbuilding construction, up 9 percent, and residential construction, up 5 percent. The nonresidential building market was down 7 percent in the January-June period.

Geographically, the first six months of 1993 revealed a divergent pattern. Total construction contracting was stronger in the South Central and South Atlantic regions, with respective gains of 10 and 9 percent. In contrast was the performance of the other three regions -- the North Central, down one percent; the Northeast, down 2 percent; and the West, down 5 percent.
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Title Annotation:report from F.W. Dodge division of McGraw-Hill Information Services for 1993
Publication:Real Estate Weekly
Date:Aug 11, 1993
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