August Construction Activity Advances 7%
"The construction industry in 2002 has essentially stabilized close to its 2001 level, following ten straight years of expansion," stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. "The weak economy over the past year led to sharp declines for commercial and manufacturing building, but the slack has been picked up by further growth for single family housing, public works, and institutional building. As shown by the August data, these latter three sectors continue to move at a healthy clip, at least for the present."
Nonresidential building in August jumped 12% to $154.8 billion. The institutional side of the nonresidential market stayed strong, featuring a 16% gain for school construction that included the start of a $100 million high school in Illinois and an $80 million university research building in North Carolina.
Transportation terminal work also increased 16% in August, while healthcare facilities climbed 20%. The social and recreational category rose 23%, boosted by the start of a $200 million visitors center at the U .S. Capitol in Washington and a $109 million sports arena in Memphis, TN.
On the commercial side, offices and warehouses showed some strengthening from a weak July, increasing 5% and 20% respectively. Hotel construction also picked up in August, rising 47% with the help of a $139 million casino expansion in Las Vegas. However, store construction was down 5% in August, falling for the fourth consecutive month. Murray stated, "Offices, warehouses, and hotels are now seeing an occasional monthly gain, suggesting that the worst of their sharp correction is now over. At the same time, the sluggish economy and still-rising vacancy rates mean that the start of a sustained construction upturn for these categories is at least several quarters away."
During the first eight months of 2002, the 1% increase for total construction was due to this performance b major sector—residential building, up 9%; nonbuilding construction, up 1%; and nonresidential building, down 9%. By major region, total construction in the January-to-August period was the following—the Northeast, up 7%; the South Atlantic, up 6%; the Midwest, up 1 %; the West, unchanged; and the South Central, down 9%.