April Construction Activity Advances 3%
“April’s rebound is consistent with the sense that the construction industry is leveling off close to last year’s volume, as opposed to being in the early stages of a sustained decline,” stated Robert A. Murray, vice president of economic affairs for F.W. Dodge.
“The general economic slowdown has raised concern about construction’s near-term prospects, but so far in 2001 the construction industry has been able to hold up reasonably well. At the same time, it’s also true that the full impact of slower employment growth and tighter bank lending standards have yet to be felt by commercial building and housing.”
Nonresidential building in April climbed 6% to $173.7 billion. The institutional side of the nonresidential market showed across-the-board strengthening, including a 9% advance for school construction (the largest nonresidential category by dollar volume). More substantial gains were posted by healthcare facilities, up 20%; religious buildings, up 21%; and public buildings (courthouses and detention facilities), up 58%.
The transportation terminal category rebounded sharply after a weak March, surging 219% with the help of two very large projects — a $215 million airport concourse expansion in Seattle and a $118 million mass transit station near New York’s JFK International Airport. Murray stated, “School construction has continued to move upward in 2001, reflecting the enhanced funding coming from states and localities in recent years. Transportation-related projects, especially airport work, are also offering support to the nonresidential market. While emerging signs of fiscal stress at the state level may ultimately dampen school and transportation-related projects, it’s not likely that the negative impact will be seen at the construction site for at least several quarters.”
The commercial building categories featured a 51% rebound for hotel construction after a lackluster March, as well as a 6% gain for stores and a 1% pickup for warehouses. Office construction retreated 1%, providing further evidence that a moderate retreat is now underway for this category after its very strong contracting at the end of 2000.
Manufacturing plant construction in April plunged 57%, following an unusually strong March that was boosted by the start of a truck manufacturing plant as well as an optical fiber plant. “Manufacturing plant construction has been generally depressed for the past three years, and despite brief upturns, April’s data indicates that this category continues to be very weak,” stated Murray.
By region, April reported this pattern for residential building: the Northeast, up 12%; the South Central, up 4%; the South Atlantic, up 1%; the Midwest and West, both down 1%. During the first four months of 2001, total construction on an unadjusted basis maintained a 1% gain over the previous year. Nonbuilding construction led the way with a 10% increase, while residential building was up 2% and nonresidential building was down 5%.
Two of the five major regions showed total construction growth during the January-April period — the West, up 7%; and the South Central, up 3%. By contrast, declines were reported for the Midwest and South Atlantic, each down 2%; and the Northeast, down 4%.