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
University Buildings | May 11, 2023
New ‘bold and twisting’ building consolidates School of Continuing Studies at York University
The design of a new building that consolidates York University’s School of Continuing Studies into one location is a new architectural landmark at the Toronto school’s Keele Campus. “The design is emblematic of the school’s identity and culture, which is centered around accelerated professional growth in the face of a continuously evolving labor market,” according to a news release from Perkins&Will.
Sustainability | May 11, 2023
Let's build toward a circular economy
Eric Corey Freed, Director of Sustainability, CannonDesign, discusses the values of well-designed, regenerative buildings.
Hotel Facilities | May 9, 2023
A new camping destination near Utah’s Zion National Park offers a variety of all-season lodgings and amenities
Outdoor lodging brand AutoCamp has opened a new camping destination near Utah’s Zion National Park. A 16-acre property, AutoCamp Zion is located between the Virgin River and the desert of Southern Utah.
Headquarters | May 9, 2023
New Wells Fargo development in Texas will be bank’s first net-positive campus
A new Wells Fargo development in the Dallas metroplex will be the national bank’s first net-positive campus, expected to generate more energy than it uses. The 850,000-sf project on 22 acres will generate power from solar panels and provide electric vehicle charging stations.
Regulations | May 8, 2023
Supreme Court case likely to have huge impact on Clean Water Act
A case before the Supreme Court will likely determine how the Clean Water Act is interpreted and the ruling could open up new areas for development within or adjacent to wetlands.
Senior Living Design | May 8, 2023
Seattle senior living community aims to be world’s first to achieve Living Building Challenge designation
Aegis Living Lake Union in Seattle is the world’s first assisted living community designed to meet the rigorous Living Building Challenge certification. Completed in 2022, the Ankrom Moisan-designed, 70,000 sf-building is fully electrified. All commercial dryers, domestic hot water, and kitchen equipment are powered by electricity in lieu of gas, which reduces the facility’s carbon footprint.
Multifamily Housing | May 8, 2023
The average multifamily rent was $1,709 in April 2023, up for the second straight month
Despite economic headwinds, the multifamily housing market continues to demonstrate resilience, according to a new Yardi Matrix report.
University Buildings | May 5, 2023
New health sciences center at St. John’s University will feature geothermal heating, cooling
The recently topped off St. Vincent Health Sciences Center at St. John’s University in New York City will feature impressive green features including geothermal heating and cooling along with an array of rooftop solar panels. The geothermal field consists of 66 wells drilled 499 feet below ground which will help to heat and cool the 70,000 sf structure.
Office Buildings | May 4, 2023
In Southern California, a former industrial zone continues to revitalize with an award-winning office property
In Culver City, Calif., Del Amo Construction, a construction company based in Southern California, has completed the adaptive reuse of 3516 Schaefer St, a new office property. 3516 Schaefer is located in Culver City’s redeveloped Hayden Tract neighborhood, a former industrial zone that has become a technology and corporate hub.
Mass Timber | May 3, 2023
Gensler-designed mid-rise will be Houston’s first mass timber commercial office building
A Houston project plans to achieve two firsts: the city’s first mass timber commercial office project, and the state of Texas’s first commercial office building targeting net zero energy operational carbon upon completion next year. Framework @ Block 10 is owned and managed by Hicks Ventures, a Houston-based development company.