Construction Activity in Rises 2% in January
"The construction industry proved to be one of the healthier sectors of the economy during 2001, and the slight gain in January suggests that construction remains resilient," stated Robert A. Murray, vice president of economic affairs for F. W .Dodge. "Single family housing and school construction were the industry mainstays during 2001, offsetting weakness for commercial building, and the first month of 2002 shows a continuation of that trend. At the same time, the steep drop in new power plant starts for January is an early sign that this category won't see a repeat of last year's exceptional performance."
Nonresidential building in January grew 8% to $165.5 billion. School construction, the largest nonresidential category by dollar volume, advanced 22%. "Recent years have seen states and localities direct more money toward school construction, responding to rising student enrollments and the need to upgrade existing facilities," noted Murray. "The deteriorating fiscal position of state and local governments may ultimately dampen the amount of school construction, but it hasn't happened yet." The smaller institutional categories showed a mix of pluses and minuses in January. Strong gains were reported for healthcare facilities, up 21%; churches, up 37%; and transportation terminals, up 46%. Moving in the opposite direction were amusement-related projects, down 17%; and public buildings (courthouses and detention facilities), down 18%.
The commercial side of the nonresidential market was generally weaker in January. Warehouses dropped 17%, while offices and hotels showed respective declines of 7% and 2%. Stores and shopping centers, up 18%, ran counter to the downward trend for the other commercial building types. Murray indicated, "While the weak economy and more restrictive bank lending have adversely affected commercial building, the pullback for store construction has been comparatively mild, given continued expansion by the stronger players in the retail sector." Manufacturing plant construction in January witnessed further weakening, sliding an additional 27%.
The regional pattern for total construction in January 2002 compared to the prior year was the following--the Midwest, up 17%; the South Atlantic, up 13%; the Northeast, down 8%; the South Central, down 11 %; and the West, down 18%.