Construction Rises 6% across US During July
NEW YORK -- New construction starts in July climbed 6% to a seasonally adjusted annual rate of $588.8 billion, McGraw Hill Construction reports.
Nonresidential building continued to advance, supported by yet another robust month for manufacturing plant projects as well as an improving market for commercial building.
The nonbuilding construction sector (public works and electric utilities) also advanced, helped by the start of a very large mass-transit rail project, says McGraw Hill Construction, a division of McGraw Hill Financial. At the same time, residential building was unchanged from in June. For the first seven months of 2014, total construction starts on an unadjusted basis were reported at $311.6 billion, a 4% gain compared to the same period a year ago.
The July statistics raised the Dodge Index to 125 (the year 2000=100), up from a revised 118 for June and marking the highest level for the Dodge Index so far in 2014.
"The construction expansion this year is getting more of a contribution from nonresidential building," stated Robert A. Murray, chief economist and vice president for McGraw Hill Construction, in a prepared statement. "Manufacturing plant construction is seeing the start of numerous chemical and energy-related projects, consistent with the nation's growing energy sector. Commercial building is maintaining its upward momentum from low levels, while institutional building with its up-and-down pattern appears to be stabilizing after a lengthy decline. With residential building being limited so far in 2014 by the sluggish single-family market, the further growth for nonresidential building has been needed to keep the construction expansion going. As for public works, this year's pullback has stayed moderate, helped in part by the ongoing strength for mass transit work. The recent passage of a $10.8 billion 'patch' by Congress to shore up the Highway Trust Fund through May 2015 should also help to keep this year's public works downturn from getting much more severe."
By geography, total construction starts in the first seven months of 2014 showed gains in two regions: The South Central, up 18%, and the Northeast, up 5%. The West was unchanged from the same period a year ago, while declines were posted by the Midwest, down 1%, and the South Atlantic, down 3%.
Nonresidential building in July increased 7% annualized to $229 billion, showing further growth on top of the 12% increase reported in June. The manufacturing plant category jumped 44%, reflecting the start of still more chemical and energy-related plants, including two major projects in Texas -- a $3 billion petrochemical plant in Baytown and a $1.7 billion ethylene plant in Freeport.
Hotel construction in July climbed 29%, helped by groundbreaking for a $190 million hotel/time-share tower in Honolulu and $114 million for the hotel portion of a $300 million mixed-use building in Los Angeles.
Store construction improved 12%, aided by the start of a $49 million mall addition in Denver. Office construction grew 8%, supported by the start of $252 million for the office portion of a $420 million mixed-use building in Minneapolis and $170 million for the office portion of a $225 mixed-use building in Dallas. Warehouse construction was the one commercial project type exception; it slipped 13% in July.
Residential building, at $223.4 billion (annual rate) in July, held even with June. Single-family housing slipped 3%, reflecting this performance by major region: The West, down 10%; the Northeast and South Central, both down 3%; the Midwest, unchanged, and the South Atlantic, up 1%. Since the end of 2013, single-family housing has been essentially flat, placing the strong upward movement that was reported during 2012 and most of 2013 on hold.
Highways and bridges moved downward during July, sliding 11% and 21%, respectively. The environmental public works categories lost momentum in July, with river/harbor development and water supply systems both down 7% while sewer construction fell 9%.
The electric utility and gas plant category jumped 55%. Large projects that boosted the electric utility and gas plant totals included a $1.5 billion natural gas liquid fractionator plant in Texas and $500 million for electrical system upgrades to the East Side Access Tunnel project in New York City.
The 4% gain for total construction starts on an unadjusted basis the first seven months of 2014 was the result of a varied performance by the three main construction sectors. Nonresidential building during the period advanced 13.
Copyright 2014 The Business Journal, Youngstown, Ohio.
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