AWI e-briefs - 04/01/2010 (Plain Text Version)
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February Construction Rises 5% -- A Positive Sign
At an annual rate of $440.9 billion (seasonally adjusted), new construction starts in February climbed 5% from the previous month, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies.
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Much of the lift was provided by the public works sector, reflecting strength for both transportation and environmental projects. Residential building also showed improvement in February, but nonresidential building slipped back after January’s gain, according to McGraw-Hill. For the first two months of 2010, total construction on an unadjusted basis came in at $57.2 billion, essentially the same amount as reported during the first two months of 2009.
The February statistics produced a reading of 93 for the Dodge Index (2000=100), up from 89 in January. "The pattern shown during February is what’s expected for 2010 as a whole – more public works construction, improved activity for residential building, but further weakness for nonresidential building," stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. The positives for housing include low mortgage rates and a shrinking inventory of unsold homes. For nonresidential building, however, the tough environment for project financing remains a substantial constraint."
Residential building, at $141.3 billion (annual rate), rose 5% in February, according to McGraw-Hill. Single family housing grew 3%, continuing the gradual upward movement that began last spring. By region, gains for single family housing were reported in the west (up 1%), the south central (up 2%), the northeast (up 3%), and the midwest (up 14%), but the South Atlantic retreated (down 2%). Multifamily housing, while still at a very weak level, increased 23% in February. Over the past two years, the number of large multifamily projects has fallen substantially, so the February start of two apartment buildings represents a departure from recent experience.
Nonresidential building in February dropped 7% to $147.3 billion (annual rate), after posting a 12% gain in January. Healthcare facilities also retreated from a strong January, falling 34%. February declines were also registered by manufacturing plants, down 24%; and churches, down 28%.
On the plus side, the nonresidential total in February featured a 25% increase for educational buildings. The public buildings category in February grew 9%, helped by the start of a $75 million historic renovation project for City Hall in New York NY. Other institutional categories with February gains were dormitories, up 19%; and amusement-related projects, up 9%.
McGraw-Hill reported that additional perspective is obtained by looking at twelve-month moving totals, in this case the twelve months ending February 2010 compared to the twelve months ending February 2009. On this basis, total construction is down 20%, reflecting this pattern by sector – residential building, down 21%; nonbuilding construction, down 6%; and nonresidential building, down 28%. By region, the twelve months ending February 2010 showed this behavior for total construction compared to the prior twelve months – the Northeast, down 11%; the South Central, down 18%; the South Atlantic, down 20%; the West, down 22%; and the Midwest, down 23%.
See the press release dated March 18, 2010 for more detail.