McGraw-Hill Reports Decreased Construction Starts in September

October 17th, 2012 by Editor

McGraw-Hill Construction released its September 2012 monthly summary of construction starts, showing declines in both the commercial and residential sectors. Overall, though, new construction starts rose 16 percent, according to the figures released today.

McGraw-Hill reports nonresidential growth fell 5 percent in September following its previous 7 percent gain in August. The majority of the institutional sector showed decreases, namely in the educational sector which dipped 16 percent despite several multi-million dollar projects in Massachusetts, Minnesota and Texas as well as a $110 million science and research center at Temple University in Philadelphia. Amusement-related work and churches also experienced steep declines of 27 and 18 percent, respectively. Healthcare facilities (+5) and public buildings (+2), such as courthouses and detention centers, did see slight percent increases.

Commercial growth in September was much stronger than in August, however. Warehouse construction increased significantly at 60 percent and hotel construction grew by 37 percent. Retail and office construction are up 11 and 9 percent, respectively.

Nonresidential starts declined to $139 billion in September from $146 billion in August. Year-to-date figures show an overall 12 percent decline in nonresidential from $124.7 billion in 2011 to $109.2 billion in 2012.

Residential growth fell 1 percent in September. Totals dropped from $172.2 billion in August to $170.3 billion in September. Multifamily housing experienced a more significant slip from a 43 percent hike in August down to only a 10 percent increase in September. Single-family housing maintained a modest growth of 2 percent. An overall 5 percent increase in total residential construction is cited as the result of “heightened activity” for two main construction groups in the report.

Year-to-date gains for residential construction grew 26 percent, while single-family housing increased by 25 percent. Multi-family housing saw an increase of 30 percent. Overall, the residential sector saw an increase in year-to-date construction starts from $94.4 billion in 2011 to $119.3 billion for 2012.

Geographically, total construction starts in the South Atlantic region showed the largest boom with a 33 percent increase resulting from the construction of two nuclear power plants inGeorgiaandSouth Carolina. This number decreases to only a 6-percent increase if the power plant projects are excluded. TheMidwestalso experienced a 6-percent growth and the South Central region saw a 2-percent increase. The Northeast decreased 5 percent and the West declined by 9 percent.

“Decreased activity continues to be reported in 2012 for institutional building, manufacturing plants and public works,” says Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. “Going into 2013, it’s not expected that electric utilities will be able to maintain the record pace witnessed in 2011 and 2012, and tight government budgets will restrain the institutional building and public works sectors. It will be up to housing and commercial building to provide upward momentum, and the impending ‘fiscal cliff’ makes continued growth for these sectors less certain.”

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