Supply House Times

Construction employment below peak in all but eight areas; Jan. starts dip

February 24, 2012
The value of new construction starts fell 2%, seasonally adjusted, in January, McGraw-Hill Construction reported Feb. 21, based on data it collected.

The value of new construction starts fell 2%, seasonally adjusted, in January, McGraw-Hill Construction reported Feb. 21, based on data it collected. “Both nonresidential building and housing settled back from December, while the nonbuilding construction sector managed to register a modest gain with the help of a rebound for new electric utility starts. On an unadjusted basis, total construction starts in January were…down 14% from the same month a year ago. For the 12 months ending January 2012 vs. the 12 months ending January 2011, which lessens the volatility present in one-month comparisons, total construction starts were down 3%.

“Nonresidential building in January slipped 1%....On the institutional side, weaker activity was reported for most of the structure types. The educational building category, which fell 12% during 2011, dropped 3% in January relative to the previous month….On the commercial side, the recent upward trend for hotels and warehouses paused in January, with hotels down 16% and warehouses down 11%....Store construction in January was able to move 12% from its depressed December amount, and office construction advanced 20%.

“The manufacturing plant category in January plunged 39%, sliding back from the improved activity that was reported during the fourth quarter of last year. Residential building…dropped 8% in January. Multifamily housing fell 26%, retreating from the elevated volume reported in December….Nonbuilding construction in January increased 3%....Much of the upward lift came from electric utilities, which jumped 36% relative to a lackluster December. The electric utility category for 2011 as a whole surged 46%...”

The value of nonresidential construction starts fell 17%, not seasonally adjusted, in January, Reed Construction Data reported Feb. 24, based on data it collected. “Commercial starts rose [17%] after increasing 6.2% in December….For 2011 the commercial starts total was up 15%....Using a three-month moving average to smooth out some of the volatility in the monthly numbers, industrial starts in January stood at their second-highest level in nine months. Taking a full year perspective, industrial starts were up 43% for 2011 over 2010. Institutional building starts fell 31% in January following increases of 11% in December and 16% in November.

“For 2011, institutional starts were up 11% from 2010….Heavy engineering (nonbuilding) starts fell for the third month in a row….The 6.3% increase for 2011 over 2010 may provide a better reading on what has been happening….all major categories of starts for heavy engineering except bridges rose in 2011.”

Construction employment

An annual survey of 394 contractors, service suppliers, equipment distributors and manufacturers conducted Jan. 4-15 found “a marked improvement in optimism over the 2011 [survey] that local nonresidential construction activity will improve” over prior-year levels, Wells Fargo Equipment Finance reported Feb. 22. But “industry executives remain cautious about the amount of available work to sustain the current number of nonresidential construction contractors. About [42%] said they expect fewer contractors in their markets by the end of the year. Only 10% expect the number of contractors in their area to increase in 2012.

“Equipment distributors are very optimistic [about] new equipment sales: 73% said they expect to sell more in 2012 than in 2011, and zero respondents said they expect a decrease. [58% expect] an increase in local nonresidential construction activity. Only 1.5% said they expect [a] decrease in 2012. Contractors are optimistic, but not as much. While 18% of contractors said they expect to acquire more new equipment in 2012 than they acquired in 2011, 52.5% said they would acquire the same amount and 29% said they expect to buy less….Regarding nonresidential construction activity in the coming year, 40% of contractors said they expect” a rise; 47% expect the same level; and 12%, a drop.

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