"Amidst the ups and downs this year, the construction industry has essentially stabilized close to its 2001 pace," stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. "Institutional building and public works have shown further growth, as eroding federal and state budgets have yet to have much negative impact at the construction site. But over the past twelve months, commercial building has fallen sharply, in similarity to the broader pullback by business investment."
Nonresidential building in June grew 4% to $160.2 billion. School construction, the largest nonresidential category by dollar volume, rebounded 1% after slipping back in May. An upward push also came from a 60% increase for public buildings, aided by the start of several large courthouses and detention facilities. Showing improvement from very weak levels in May were hotels (up 11%), office buildings (up 20%), and manufacturing buildings (up 27%). June also witnessed steady contracting for stores, but declines were posted by warehouses (down 4%), churches (down 7%), health care facilities (down 12%), and transportation terminals (down 52%).
Despite the June gain, nonresidential building during the first half of 2002 was down 11% from its year-ago amount. The general weakness for nonresidential building has been largely the result of reduced contracting for commercial building, including stores (down 12%), warehouses (down 28%), offices (down 32%), and hotels (down 36%).
Murray stated, "The slide for commercial building over the past year has been steep, with construction now well below the peak levels at the end of the 1990s. While the worst of the decline appears to be over, vacancy rates are now substantially higher in many metropolitan areas, meaning that it will be a while before commercial building is able to see renewed expansion." The institutional categories have fared better in 2002, with first half increases reported for health care facilities (up 29%), churches (up 6%), public buildings (up 1%), and transportation terminals (up 1%). School construction in the first half of 2002 was down 3%, but its level can still be viewed as very strong since the comparison is being made against last year's record high pace.
On a regional basis, the first half 2002 statistics for total construction compared to last year showed growth in the Northeast, up 5%; the Midwest, up 4%; and the South Atlantic, up 3%. The West and South Central posted declines in the January-June period, dropping 2% and 10%, respectively.