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 21, 2011
Hoboken Terminal restoration complete
Restoration of ferry slips, expanded service to benefit commuters.
| Dec 21, 2011
BBI key to Philly high-rise renovation
The 200,000 sf building was recently outfitted with a new HVAC system and a state-of-the-art window retrofitting system.
| Dec 20, 2011
Gluckman Mayner Architects releases design for Syracuse law building
The design reflects an organizational clarity and professional sophistication that anticipates the user experience of students, faculty, and visitors alike.
| Dec 20, 2011
Research identifies most expensive U.S. commercial real estate markets
New York City, Washington, D.C. and San Mateo, Calif., rank highest in rents.
| Dec 20, 2011
Third annual Gingerbread Build-off winners announced
Nine awards were handed out acknowledging the most unique and creative gingerbread structures completed.
| Dec 20, 2011
BCA’s Best Practices in New Construction available online
This publicly available document is applicable to most building types and distills the long list of guidelines, and longer list of tasks, into easy-to-navigate activities that represent the ideal commissioning process.
| Dec 20, 2011
Aragon Construction leading build-out of foursquare office
The modern, minimalist build-out will have elements of the foursquare “badges” in different aspects of the space, using glass, steel, and vibrantly painted gypsum board.
| Dec 20, 2011
HOAR Construction opens Austin, Texas office
Major projects in central Texas spur firm’s growth.
| Dec 19, 2011
HGA renovates Rowing Center at Cornell University
Renovation provides state-of-the-art waterfront facility.
| Dec 19, 2011
Chicago’s Aqua Tower wins international design award
Aqua was named both regional and international winner of the International Property Award as Best Residential High-Rise Development.
