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
| Jan 26, 2012
Summit Design+Build completes law office in Chicago
Applegate & Thorne-Thomsen's new office suite features private offices, open office area, conference rooms, reception area, exposed wood beams and columns, and exposed brick.
| Jan 24, 2012
New iPad app ready for prime time
Siemens’ versatile application connects users to APOGEE BAS control and monitoring functions via wireless network connectivity. The application directly interacts with BACnet/IP and Siemens APOGEE P2 field panels.
| Jan 24, 2012
Vyhanek joins Thornton Tomasetti’s Kansas City office
Vyhanek will assemble a new MEP team in the Midwest to support Building Performance and Property Loss Consulting practices.
| Jan 24, 2012
U of M installs new lighting at Crisler Player Development Center
Energy efficient lighting installed at PDC reduce costs and improves player performance.
| Jan 24, 2012
Rockingham County Judicial Center receives USGBC Gold NC v.2.2
The Rockingham facility is the first judicial center in North Carolina to seek certification from the U.S. Green Building Council’s LEED Building rating system.
| Jan 19, 2012
LEED puts the 'Gold' in Riverside golden arches
McDonald's restaurant recognized for significant energy savings.
| Jan 19, 2012
Odebrecht and Braskem bring sustainable award to U.S. university students
The Odebrecht Award for sustainable development rewards future leaders in engineering and chemistry.
| Jan 19, 2012
BOKA Powell-designed facility at Texas A&M Bryan campus
The new facility provides programs for the Texas A&M Health Science Center, the Texas Brain and Spine Institute, Mary Crowley Cancer Research Centers, and Blinn College Allied Health programs.
| Jan 17, 2012
SOM Chicago wins competition to design China's Suzhou Center
The 75-level building is designed to accommodate a complex mixed-use program including office, service apartments, hotel and retail on a 37,000 sm site.
| Jan 17, 2012
FxFowle and CO Architects form joint venture
FxFowle and CO Architects creates a dynamic alliance built on a shared dedication to collaboration in process, innovation in programming, and excellence in design.
