New Construction Starts in July Retreat 8%
The current year has seen an up-and-down pattern—elevated contracting at the outset of 2002, reduced activity in early spring, a rebound in May and June, followed by a decline in July. "The volume of new construction in July was at the low end of this year's range, but it's still consistent with the sense that total construction activity in 2002 is hovering around last year's average pace," stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction.
Nonresidential building, at $140.5 billion, was down 10% in July. The commercial categories generally saw weaker contracting—offices down 22%; hotels down 7%; stores down 2%, and warehouses down 1%. Murray stated, "After a lengthy decline, office construction had appeared to be stabilizing at a reduced volume, but July's downturn shows that retrenchment is still in progress. Rising office vacancies and uncertainty about the tenuous economic recovery continue to dampen prospects for a construction rebound." Manufacturing plant construction in July dropped 38%, as this project type remains depressed.
The institutional side of the nonresidential market registered a mixed performance in July. Settling back from recent strength were schools, down 6%; and health care facilities, down 19%. The public building category (courthouses and detention facilities) had an especially weak July, dropping 40%. Holding steady in July were amusement-related projects, supported by the start of a $107 million sports arena in Phoenix. On the plus side, church construction in July increased 16%, while transportation terminal work jumped 36% with the help of a $67 million airport terminal project in Seattle.
By geography, total construction performed as follows during the January to July period—the Northeast up 5%; the South Atlantic up 5%; the Midwest up 2%; the West down 1 %; and the South Central down 10%.