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
| Dec 27, 2011
Clayco awarded expansion of Washington University Data Center in St. Louis
Once completed, the new building addition will double the size of the data center which houses sophisticated computer networks that store massive amounts of genomic data used to identify the genetic origins of cancer and other diseases.
| Dec 27, 2011
Ground broken for adaptive reuse project
Located on the Garden State Parkway, the master-planned project initially includes the conversion of a 114-year-old, 365,000-square-foot, six-story warehouse building into 361 loft-style apartments, and the creation of a three-level parking facility.
| Dec 27, 2011
Nova completes $60M Clearwater Conference Center
Comprising an entire city block, the 450,000 sq. ft. facility features over 400 meeting rooms, six theaters, a full-service health spa, complete with an indoor running track, and a commercial kitchen that can efficiently accommodate over 1,000 diners
| Dec 27, 2011
BD+C's Under 40 Leadership Summit update
The two-day Under 40 Leadership Summit continued with a Leadership Style interactive presentation; Great Solutions presentations from Under 40 attendees; the Owner’s Perspective panel discussion; and the Blue Ocean Strategy presentation.
| Dec 27, 2011
Suffolk Construction celebrates raising of Boston Tea Party Ships & Museum cupola
Topping off ceremony held on 238th Anniversary of Boston Tea Party.
| Dec 27, 2011
State of the data center 2011
Advances in technology, an increased reliance on the Internet and social media as well as an increased focus on energy management initiatives have had a significant impact on the data center world.
| Dec 27, 2011
USGBC’s Center for Green Schools releases Best of Green Schools 2011
Recipient schools and regions from across the nation - from K-12 to higher education - were recognized for a variety of sustainable, cost-cutting measures, including energy conservation, record numbers of LEED certified buildings and collaborative platforms and policies to green U.S. school infrastructure.
| Dec 21, 2011
DOE report details finance options for PV systems in schools
The report examines the two primary types of ownership models used to obtain PV installations for school administrators to use in selecting the best option for deploying solar technologies in their districts.
| Dec 21, 2011
AIA Chicago & AIA Chicago Foundation 2011 Dubin Family Young Architect Award announced
The Dubin Family Young Architect Award is bestowed annually and recognizes excellence in ability and exceptional contributions by a Chicago architect between the ages of 25 and 39.
| Dec 21, 2011
Few silver linings for construction in 2012
On the brighter side, nearly half of respondents (49.7%) said their firms were in at least “good” financial health, and four-fifths (80.2%) said their companies would at least hold steady in revenue in 2012.