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Construction Starts Up 13% in August vs July

0 266 Market Intelligence

Reed Construction Data (RCD) announced today that the year-to-date value of construction starts through August 2009, excluding residential contracts, totaled $162.3 billion, 13.0% less than in the same period in 2008. Individual month of August starts were 12.7% higher than in July. The large August gains were a combination of heavy stimulus projects getting underway and a continuing offset to the exceptionally low level of June starts, says Reed Construction Data chief economist Jim Haughey.

Reed Construction Data (RCD) announced today that the year-to-date value of construction starts through August 2009, excluding residential contracts, totaled $162.3 billion, 13.0% less than in the same period in 2008. Individual month of August starts were 12.7% higher than in July. The large August gains were a combination of heavy stimulus projects getting underway and a continuing offset to the exceptionally low level of June starts.

The June-August starts average is on track with previous months after allowing for the usual seasonal improvement during the summer and the startup of stimulus projects. It is also consistent with the Reed Construction Data forecast which expects construction spending to dip slightly into the winter before growth resumes.

The value of construction starts each month is summarized from RCD’s database of all active construction projects in the United States, excluding single-family homes. Missing project values are estimated using RSMeans’ building cost models.

The largest gains in August were for the stimulus targeted markets — bridges ($1.273 billion), dams and marine ($0.663 billion), water/sewage ($0.627 billion) and highways ($0.605 billion) — plus miscellaneous commercial ($0.917 billion) and amusement ($0.501 billion). The stimulus-targeted markets will have rising starts for several more months and then starts will remain high well into next year.

The starts report does not yet clearly show the stimulus impact on building markets although education, library/ museum and government offices all posted $0.3 billion gains in August. The stimulus impact on building starts will be primarily in 2010 as has always been expected. The only significant decline was $1.043 billion for hospitals after two strong months.

Both manufacturing and miscellaneous civil starts remained very high in August due to energy-related projects including power generation and distribution, oil and gas field facilities and refinery retrofitting to produce cleaner fuels. This investment surge will not persist much longer in the face of depressed energy demand. Manufacturing capacity utilization, while now rising again, is near the record low level.

Value of United States Construction Starts — August 2009
(Reed Construction Data)

  Jan-Aug
2009
(millions)
% Change
(Jan-Aug 09 vs
Jan-Aug 08)
  Jan-Aug
2009
(millions)
% Change
(Jan-Aug 09 vs
Jan-Aug 08)
Hotel/Motel $3,613 -54.6%   Government Office $2,337 -46.0%
Retail $10,261 -40.2%   Laboratory $2,199 -20.0%
Parking Garage $855 -43.9%   Warehouse $1,597 -9.3%
Amusement $4,369 19.1%   Misc. Commercial $5,102 68.8%
Private Office $8,178 -39.2%  
COMMERCIAL $38,511 -30.8%

INDUSTRIAL (Manufacturing) $2,089 -17.6%

Religious $1,532 -15.8%   Police/Courthouse/Prison $3,756 -18.7%
Hospital/Clinic $13,042 -8.7%   Military $2,067 -49.1%
Nursing/Assisted Living $2,119 -6.1%   School/College $33,194 -16.9%
Library/Museum $2,085 -8.7%   Misc. Government $3,527 -2.3%
INSTITUTIONAL $61,322 -15.9%  

Misc. Non-residential $1,594 18.9%
NON-RESIDENTIAL BUILDING $103,516 -21.8%

Airport $2,159 42.0%   Dam/Marine $1,652 34.4%
Road/Highway $23,730 2.4%   Water/Sewage $13,605 -4.1%
Bridge $7,893 40.2%   Misc. Civil $9,772 14.8%
HEAVY ENGINEERING $58,811 8.4%

TOTAL NON-RESIDENTIAL $162,327 -13.0%

Source: Reed Construction Data (RCD) and Property & Portfolio Research (PPR) (www.ppr.info).
Table: Reed Construction Data – CanaData.

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by Jim Haughey

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