"It's true that the construction industry lost momentum during the early months of 2003, but so far the retreat can be characterized as a measured pullback," stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction Dodge.
"April's stability is a good sign that the slowdown will continue to be mild, helped by an offsetting pattern by sector. Public works is experiencing some dampening from tighter fiscal conditions, but commercial building is now showing more of an up-and-down pattern, following its extended decline of the prior two years. Whether this up-and-down pattern can turn into a more sustained upward trend will depend upon how much strengthening the economy is able to show over the next couple of quarters."
Nonresidential building in April advanced 7% to $150.5 billion. Although store construction slipped back 2%, April witnessed generally stronger activity for commercial building. Warehouses jumped 26% after a very weak March, while office construction increased 22%, helped by the start of a $141 million federal office building in San Francisco and a $110 million office building in Chicago. Murray stated, "It's true that the volume of office construction is down substantially from three years ago, but on the positive side the weakening trend has become less severe, and there's now an occasional monthly gain, such as April."
Hotel construction was up 11% compared to March, boosted by the start of a $155 million hotel/casino project in Las Vegas. The institutional building categories in April generally showed improvement. School construction edged up 1%, while health care facilities surged 25% from a weak March, buoyed by the start of several segments of a large medical center in Los Angeles, totaling $445 million.
The amusement category bounced back 27% from a weak March, and transportation terminal work was also up 4%. However, reduced contracting was reported for public buildings (courthouses and detention facilities), down 6%; and churches, down 11%. The manufacturing plant category in April also experienced reduced contracting, slipping 5%.
During the first four months of 2003, total construction on an unadjusted basis was down 5% from a year ago. Residential building advanced 5%, but nonresidential building was down 11% and nonbuilding construction was down 21%. On a regional basis, total construction during the January to April period of 2003 showed this performance compared to 2002 -- the West, up 9%; the South Central, up 2%; the South Atlantic, down 5%; the Midwest, down 11%; and the Northeast down 28%.