Reed Construction Data has announced that the dollar value of construction starts in June, excluding residential activity, surged 34% versus May. The figures are in "current" dollars, meaning they are not adjusted for inflation.
The individual month of June, at $32.0 billion, was one of the strongest in Reed's entire database. To find a similarly high volume, one has to look back at June 2008, just before the Great Recession really took hold.
The one-third increase was an outsized gain, even after taking into account seasonality. Reed's long-term average May-to-June increase has been 4.5%. By comparison, May's month-to-month percentage change was +6.2% and April's -4.5%.
June starts this year compared with June of last year were +14.4%. The year-to-date level of total nonresidential construction starts, at $138 billion, was +2.4% when compared with the same January to June period of 2013.
Nonresidential construction accounts for a considerably larger share than of the total than residential work. The former's proportion of total put-in-place construction in the Census Bureau's May report was 62% versus the latter's 38%.
Reed's construction starts are leading indicators for the Census Bureau's capital investment or put-in-place series.
After a shockingly harsh winter, during which GDP contracted, the U.S. economy is back on an expansionary path with stock market indices near record highs and the unemployment rate close to the nation's 20-year average of 6.0%. Firms in the private sector are feeling more pressure to build new facilities.
The month-to-month leaders among major nonresidential construction categories were commercial +39%, and heavy engineering +34.7%. Institutional work was also up +3.6%, but to a much lesser degree. Industrial starts recorded a large percentage gain, but it came on top of a smaller dollar volume than the other three.
Commercial starts this June were even more impressive, +48.5%, when compared with June of last year. Engineering starts this June versus the same month last year were +13.7%. Institutional starts were -8.1%.
Year to date, heavy engineering (+13%) is out front, followed by institutional (+5.9%). Commercial starts (-14.5%) are still down from last year. Industrial work is 13.5%.
In commercial construction's two largest sub-categories, retail starts were +8.3% month to month, but -8.1% year to date, while private office building starts were +81.6% month to month and +29.6 year to date.
In the institutional category of work, school and college starts were +7.5% month to month and +9.7% year over year. Hospital/clinic starts moved in the opposite direction, -43.2% month to month and -12.3% year to date.
With the exception of dam/marine work, all the sub-categories of heavy engineering construction were ahead both month to month and year to date, with water and sewage work especially strong versus May, +40.2.
Institutional and heavy engineering work have especially close ties to government finances. Washington's deficit is diminishing, although the debt load remains high. At the state and local levels, the ongoing improvement in the overall economy is providing budgetary payoffs.
The nonresidential construction sector will derive benefits from taxes that are increasing naturally. Stronger employment and higher incomes lift income tax revenues; advances in consumer spending yield more sales taxes; and rising home prices translate into improved property taxes.
The value of construction starts each month is summarized from Reed's database of all active construction projects in the U.S. Missing project values are estimated with the help of RSMeans' building cost models.
See Reed Construction Data's full Construction Industry Snapshot here.
Related Stories
Green | Apr 11, 2017
Passivhaus for high-rises? Research demonstrates viability of the stringent standards for tall residential buildings
A new study conducted by FXFOWLE shows that Building Teams can meet stringent Passivhaus performance standards with minimal impact to first cost and aesthetics.
Curtain Wall | Apr 11, 2017
Masters of geometry
Three firms that specialize in façades that curve, twist, and turn see themselves as artisans of the unthinkable.
Office Buildings | Apr 10, 2017
Innovation lab makes developing eye care solutions a collaborative affair
The Shop East innovation lab presents 13,500 sf of workspace across two floors with an emphasis on collaboration.
Architects | Apr 10, 2017
New Bjarke Ingels documentary gives a peek behind the curtain
The movie takes a slightly darker tone than previous projects chronicling the starchitect’s rise to prominence.
Architects | Apr 4, 2017
Architect Howard Elkus dies at 78
Cofounder of Elkus Manfredi Architects, his career spanned five decades, and included a spectrum of major design projects.
Building Team | Apr 4, 2017
Dispelling five myths about post-occupancy evaluations
Many assume that post-occupancy (POE) is a clearly-defined term and concept, but the meaning of POE in practice remains wildly inconsistent.
Structural Materials | Apr 3, 2017
Best of structural steel construction: 4WTC, Fulton Center, Pterodactyl win AISC IDEAS2 Awards
The annual awards program, sponsored by the American Institute of Steel Construction, honors the best in structural steel design and construction.
Green | Mar 29, 2017
Copenhagen Zoo and BIG unveil yin yang-shaped panda habitat
The new habitat will sit between two existing buildings, including the Elephant House designed by Norman Foster.
Architects | Mar 28, 2017
A restroom for everyone
Restroom access affects everyone: people with medical needs or disabilities, caretakers, transgender people, parents with children of the opposite gender, and really anyone with issues or needs around privacy.
High-rise Construction | Mar 27, 2017
Density and tall buildings
CRTKL’s Maren Striker examines Europe’s desire to build upward.