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    Up-and-Down Pattern Replaces Straight Declines, McGraw Hill Construction Reports

    June 5, 2009
    The value of new construction starts dropped 1 percent in April to a seasonally adjusted annual rate of $386.6 billion, according to McGraw Hill Construction. The loss of momentum was the result of a slower pace for public works construction, which grew in March by the start of several large pipeline and rail projects. Also, nonresidential building in April picked up the pace after weak activity the previous two months.

    The value of new construction starts dropped 1 percent in April to a seasonally adjusted annual rate of $386.6 billion, according to McGraw Hill Construction. The loss of momentum was the result of a slower pace for public works construction, which grew in March by the start of several large pipeline and rail projects. Also, nonresidential building in April picked up the pace after weak activity the previous two months.

    “The pattern of construction starts over the past two months suggests a transition from extended declines to more of an up-and-down pattern, which generally takes place when a bottom gets established,” said Robert Murray, vice president of economic affairs for MHC. “This process of establishing a bottom is still in its early stages, and will be affected by how different construction sectors perform in coming months. The impact from the stimulus bill on public works construction is just beginning to emerge, with this sector expected to see more strength as 2009 proceeds. Single-family housing remains at a very low volume, but the worst of its correction appears to have passed. For nonresidential building, there’s been the occasional display of resilience by such institutional structure types as healthcare facilities and public buildings, but the downward trend for the commercial structure types is still very much underway.”

    Nonbuilding construction in April declined 19 percent to $114.7 billion (annual rate), after a 28-percent increase in March. Nonresidential building increased 9 percent in April to $166.4 billion (annual rate), with manufacturing building providing much of the upward push because of the start of a $1 billion upgrade to a centrifuge plant in Ohio. Excluding this large project, the manufacturing building category would be down 7 percent, while the increase for nonresidential building would be lowered to 1 percent.

    Residential building in April increased 8 percent to $105.5 billion (annual rate), because of a 13-percent gain for single-family housing.

    On an unadjusted basis, total construction during the January-April period of 2009 was $117.2 billion, down 39 percent from the same period a year ago.