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July Construction Starts Up 6% from June

0 286 Market Intelligence

Reed Construction Data (RCD) announced today that the year-to-date value of construction starts through July, excluding residential contracts, totaled $149.7 billion, 7.5% more than in the same months of 2009. Individual month of July starts were 6.4% higher than in June. This is more than the usual seasonal gain in July.

Reed Construction Data (RCD) announced today that the year-to-date value of construction starts through July, excluding residential contracts, totaled $149.7 billion, 7.5% more than in the same months of 2009. Individual month of July starts were 6.4% higher than in June. This is more than the usual seasonal gain in July.

The value of starts has now been about steady for five months after allowing for seasonality. Current starts are 48% above the low point last June but remain 24% below the pre-financial-crisis peak in August 2008. The value of starts is expected to be about steady in the coming months and then begin to rise at the end of the year.

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 economic environment for construction soured again in July. The private economy continues to expand, although at a slower pace, but the public economy is collapsing with the ebbing of federal fiscal stimulus efforts which were mistakenly directed at supporting public rather than private employment. The recovery has become more fragile with the risk of a double dip recession rising to 20% to 30%.

Heavy construction starts rebounded 29% from a June dip with a surge of highway, bridge and water/sewer projects in the first month of the new fiscal year. The July starts level is unlikely to be sustained in the current troubled fiscal environment at the state level. Overall, heavy starts are likely to average below the July level through the end of the year. More site development and private infrastructure next year will offset the continued weakness in public funding.

Non-residential building starts dropped 5.3% month-to-month in July after a 9.0% gain in June. The trend continues to be positive after the plunge in starts through June 2009. The mix is beginning to change. Institutional building starts dropped 7.5% in July from June instead of the usual seasonal gain while commercial building starts increased 3.6% instead of the usual seasonal decline. This trend will become more pronounced over the rest of the year.

Value of United States Construction Starts — July 2010
(Reed Construction Data)

  Jan-Jul
2010
(millions)
% Change
(Jan-Jul 10 vs
Jan-Jul 09)
  Jan-Jul
2010
(millions)
% Change
(Jan-Jul 10 vs
Jan-Jul 09)
Hotel/Motel $3,103 -1.5%   Government Office $2,416 21.8%
Retail $9,157 2.7%   Laboratory $1,948 0.2%
Parking Garage $689 -19.1%   Warehouse $1,026 -28.5%
Amusement $4,381 43.9%   Misc. Commercial $2,606 -25.4%
Private Office $5,633 -17.9%  
COMMERCIAL $30,959 -2.3%

INDUSTRIAL (Manufacturing) $1,654 1.9%

Religious $1,297 0.4%   Police/Courthouse/Prison $4,224 33.4%
Hospital/Clinic $11,151 1.0%   Military $3,973 155.7%
Nursing/Assisted Living $1,730 -4.2%   School/College $29,668 4.1%
Library/Museum $1,774 5.9%   Misc. Government $3,997 14.2%
INSTITUTIONAL $57,814 10.1%  

Misc. Non-residential $1,101 -25.4%
NON-RESIDENTIAL BUILDING $91,528 4.8%

Airport $1,607 -20.8%   Dam/Marine $1,379 53.5%
Road/Highway $23,271 7.1%   Water/Sewage $16,534 44.7%
Bridge $7,000 0.8%   Misc. Civil $8,403 -5.7%
HEAVY ENGINEERING $58,194 12.1%

TOTAL NON-RESIDENTIAL $149,722 7.5%

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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