February Construction Holds Steady
"Total construction in 2005 is not likely to repeat the 10% growth witnessed in 2004, but the overall level of activity is still expected to stay close to last year," stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. "Eventually, higher interest rates will dampen single family housing, and even with its lackluster start to 2005, nonresidential building is anticipated to pick up some of the slack as the year proceeds."
Nonresidential building in February fell 12% to $128.0 billion (annual rate). Reduced contracting was reported for stores, down 7%; offices, down 10%; and warehouses, down 26%. Manufacturing plant construction plunged 59% from an exceptionally strong January that included the start of a large semiconductor plant in Texas. The institutional side of the nonresidential market included weakness for churches, down 10%; health care facilities, down 20%; amusement-related projects, down 26%; and public buildings (courthouses/ detention facilities), down 44%.
There were a few nonresidential structure types that registered growth in February. Educational buildings, the largest nonresidential category by dollar volume, increased 8%. Major projects reaching the groundbreaking stage in February included a $125 million research facility in New York City and an $80 million high school in Virginia. Hotel construction in February grew 11%, showing modest improvement after the low amounts of the previous two months. Transportation terminal work improved 36% over a very subdued January, helped by the start of two major renovation projects for subway and train terminals in New York City, together totaling $78 million.
On an unadjusted basis, the no change for total construction in 2005's January-February period was due to this pattern by sector, relative to last year - residential building, up 5%; nonbuilding construction, up 9%; and nonresidential building, down 15%. By geography, total construction performed as follows in 2005's first two months - the South Central, up 11%; the South Atlantic, up 2%; the West and Northeast, each steady with the same period of 2004; and the Midwest, down 15%.