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
Legislation | Nov 23, 2022
7 ways the Inflation Reduction Act will impact the building sector
HOK’s Anica Landreneau and Stephanie Miller and Smart Surfaces Coalition’s Greg Kats reveal multiple ways the IRA will benefit the built environment.
Multifamily Housing | Nov 22, 2022
10 compelling multifamily developments debut in 2022
A smart home tech-focused apartment complex in North Phoenix, Ariz., and a factory conversion to lofts in St. Louis highlight the notable multifamily developments to debut recently.
Digital Twin | Nov 21, 2022
An inside look at the airport industry's plan to develop a digital twin guidebook
Zoë Fisher, AIA explores how design strategies are changing the way we deliver and design projects in the post-pandemic world.
Healthcare Facilities | Nov 17, 2022
Repetitive, hotel-like design gives wings to rehab hospital chain’s rapid growth
The prototype design for Everest Rehabilitation Hospitals had to be universal enough so it could be replicated to accommodate Everest’s expansion strategy.
Industrial Facilities | Nov 16, 2022
Industrial building sector construction, while healthy, might also be flattening
For all the hoopla about the ecommerce boom and “last mile” order fulfillment driving demand for more warehouse and manufacturing space, construction of industrial buildings actually declined over the past five years, albeit marginally by 2.1% to $27.3 billion in 2022, according to estimates by IBIS World. Still, construction in this sector remains buzzy.
Wood | Nov 16, 2022
5 steps to using mass timber in multifamily housing
A design-assist approach can provide the most effective delivery method for multifamily housing projects using mass timber as the primary building element.
Giants 400 | Nov 14, 2022
Top 55 Airport Terminal Architecture + AE Firms for 2022
Gensler, PGAL, Corgan, and HOK top the ranking of the nation's largest airport terminal architecture and architecture/engineering (AE) firms for 2022, as reported in Building Design+Construction's 2022 Giants 400 Report.
Giants 400 | Nov 14, 2022
4 emerging trends from BD+C's 2022 Giants 400 Report
Regenerative design, cognitive health, and jobsite robotics highlight the top trends from the 519 design and construction firms that participated in BD+C's 2022 Giants 400 Report.
Green | Nov 13, 2022
NREL report: Using photovoltaic modules with longer lifetimes is a better option than recycling
A new report from the U.S. National Renewable Energy Laboratory (NREL) says PV module lifetime extensions should be prioritized over closed-loop recycling to reduce demand for new materials.
Green | Nov 13, 2022
Global building emissions reached record levels in 2021
Carbon-dioxide emissions from building construction and operations hit an all-time high in 2021, according to the most recent data compiled by the Global Alliance for Buildings and Construction.