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
| Aug 7, 2012
McCarthy tops out LEED Platinum-designed UCSD Health Sciences Biomedical Research Facility
New laboratory will enable UCSD to recruit and accommodate preeminent faculty.
| Aug 7, 2012
Pankow names Lum new CEO
Lum joined Pankow in 1980 in Hawaii and has held leadership roles in Pankow’s Honolulu and Northern California regional offices and was appointed president of the firm in 2009.
| Aug 7, 2012
Suffolk Construction builds new Boston Tea Party Ships & Museum
Construction management firm links history with the future by building museum using state-of-the-art virtual models and BIM technologies.
| Aug 7, 2012
Essex Builders to build church in Somerville, Mass.
The project’s design documents were prepared by Boston Bay Architects and reflect the church’s mission to serve the broader community as well as worship.
| Aug 6, 2012
Johnson Controls GWS appoints Genemaras as COO
Genemaras brings a wealth of experience in international business operations.
| Aug 6, 2012
Welton promoted to principal in Thornton Tomasetti’s Denver office
Welton serves as the manager of the firm’s Denver office and has more than 30 years of structural engineering experience across a range of project types including sports, commercial and residential.
| Aug 6, 2012
Kibby has joins the Harmon team
Kibby has over 24 years of experience in the glazing industry, coming to Harmon from Architectural Wall Systems where he worked in business development.
| Aug 3, 2012
Goettsch Partners opens new Abu Dhabi office
The GP Abu Dhabi office is managed by Steven M. Nilles, FAIA, LEED AP, a partner in the firm and resident of Abu Dhabi.
| Aug 3, 2012
Pinto promoted to VP in Thornton Tomasetti’s Philly office
Project experience includes commercial and residential buildings, government facilities, sports venues, airports and hotels.
| Aug 3, 2012
Nonres construction spending to increase through 2012, growth projected for 2013
Commercial and industrial projects poised to lead building sectors.