Construction Activity Holds Steady in August
“For much of 2001, the construction industry has been one of the better performing sectors of a sluggish economy,” stated Robert A. Murray, vice president of economic affairs for F.W. Dodge. “Continued expansion for public works, power plants, and schools offset a downward trend for commercial building, while the housing market stayed healthy. However, growing weakness for the economy in the aftermath of the September 11th terrorist attack is expected to adversely affect construction, due to diminished homebuyer demand and a more pronounced pullback by commercial building.”
Nonresidential building in August rebounded 4% to $154.5 billion. School construction, the largest nonresidential category by dollar volume, showed additional strength by rising 5%. The institutional side of the nonresidential market was also helped by a 50% increase for “amusement-related” work, boosted by large convention center projects in Las Vegas ($225 million) and the Atlanta area ($60 million). Healthcare facilities and churches each registered 4% gains, while public buildings (courthouses and detention facilities) retreated 17% from an elevated July.
The commercial categories in August included substantial improvement for hotels and warehouses, up 40% and 23% respectively, although in both cases the increases were relative to an exceptionally weak July. Offices advanced 7%, while store construction was down 8% and commercial garages fell 22%. Murray noted, “The August gains for hotels, warehouses, and offices are just a brief departure from this year’s general pattern, and the downward trend should resume as developers put more projects on hold in response to the weaker economic climate.” Manufacturing plant construction stayed depressed in August, slipping an additional 5%.
By geography, total construction showed this pattern during the January-August period — the West, up 6%; the South Central, up 5%; the Midwest, unchanged; the South Atlantic, down 1%; and the Northeast, down 2%.