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September construction slips; highways up 50 percent.

New construction starts in September receded I percent to a seasonally adjusted annual rate of $419.5 billion, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. Both nonresidential building and housing fell back after an improved pace in August. Meanwhile, the non-building construction sector, comprised of public works and electric utilities, strengthened for the second month in a row after weakening in early summer. For the January-September period of 2011, total construction starts on an unadjusted basis were reproved at $314.1 billion, down 5 percent from the same period a year ago.

While the highway category has generally slipped back in 2011, given the waning federal stimulus support, the month of September featured a 50 percent increase for highway construction.

"The volume of construction starts continues to hover within a set range, not yet able to gain sufficient momentum for expansion to take hold," said Robert A.

Murray, vice president of economic affairs for McGraw-Hill Construction. "For a variety of reasons, this extended plateau is likely to last a while longer."

Nonbuilding

Nonbuilding construction in September climbed 11 percent to $160.0 billion (annual rate), the third highest monthly rate for nonbuilding construction so far this year. Large projects that aided the September highway total were $1.1 billion for a highway tunnel project in Seattle, plus two large highway projects in North Carolina valued at $115 million and $112 million, respectively. Bridge construction also increased in September, rising 24 percent, with large bridge projects starting in Connecticut ($166 million) and New York ($109 million).

The "miscellaneous" public works category, which includes pipeline and mass transit work, climbed 25 percent in September. For the environmental public works categories, water supply systems grew 18 percent in September, but decreased contracting was reported for sewers, down 28 percent; and dams/water resources, down 74 percent. The electric power category had a particularly strong showing in September, advancing 52 percent from the previous month.

Nonresidential

Nonresidential building in September dropped 13 percent to $131.8 billion (annual rate). The institutional side of the nonresidential market retreated overall, pulled down in particular by a 24 percent drop for healthcare facilities after the 92 percent jump for this category in August. Also falling sharply in September were the public buildings category which plunged 36 percent; and the amusement-related category which dropped 22 percent. Cushioning the institutional downturn was a slight 1 percent increase for educational buildings. Church construction in September edged up 6 percent from a low level, and the often volatile transportation terminal category advanced 90 percent.

The commercial building categories in September featured large declines for warehouses, down 48 percent; and hotels, down 21 percent. Office construction in September improved 11 percent. The manufacturing plant category in September fell 45 percent.

Residential

Residential building, at $127.6 billion (annual rate), decreased 2 percent in September. The decline was due to a slower pace for multifamily housing, which fell 9 percent in September after witnessing gains the previous two months. Even with this downturn, the multifamily housing category in September was up 10 percent in dollar terms compared to the same period a year ago, due to this behavior by major region--the South Atlantic, up 27 percent; the West, up 24 percent; the Northeast, up 10 percent; the South Central, down 2 percent; and the Midwest, down 8 percent.

Single family housing in September held steady with August, as the pattern of recent months suggests that activity is stabilizing at a low volume after the declines shown earlier in 2011. On a year-to-date basis, single family housing in dollar terms was down 5 percent from the same period a year ago.
YEAR-TO-DATE CONSTRUCTION STARTS

(Unadjusted Totals, In Millions of Dollars)

                           9 Mos. 2011   9 Mos. 2010   % Change

Nonresidential Building    $112,907      $123,672      -9
Residential Building       91,590        94,240        -3
Nonbuilding Construction   109,611       111,506       -2
Total Construction         $314108       $329418       -5
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Title Annotation:ECONOMICS
Author:Kuhar, Mark S.
Publication:Rock Products
Date:Nov 1, 2011
Words:652
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