June construction starts up 4% — but seasonal decline is on the horizon
- The value of June nonresidential construction starts increased 4.2% from May to $34.6 billion, in line with seasonal norms, ConstructConnect reported.
- While year over year starts in June were not as "buoyant" as they were in 2015 (down 4.6%), activity in the first half of 2016 saw an increase of 11.2% over the same period last year.
- ConstructConnect added that July is traditionally the last month for seasonal bumps in activity and that, starting in August, the industry can expect fewer construction starts.
Year over year, total jobs in architectural and engineering services were up 2%, and, while construction employment was stagnant from May to June, ConstructConnect noted that year to date, the industry has seen a net job gain of 46,000. Year over year, construction employment has outpaced that of the overall economy two-fold. As a result, the industry unemployment construction rate has fallen to an unusually low rate of 4.6%, down from 8.2% in 2014.
Month to month, the institutional (12%) and commercial (10.6%) categories were up, but heavy engineering/civil (-2.5%) and industrial (-59%) were both short on starts. Year over year, institutional was the only positive category at a 17% increase in starts, while heavy engineering/civil stayed the same and industrial (-76.45) and commercial (-21.5%) fell. Year to date, industrial was the only negative category at -50.7%, while institutional (22.5%), commercial (15.4%) and heavy engineering/civil (6.5%) all showed gains.
ConstructConnect's 10 largest project starts of the month were geographically diverse, representing projects from Hawaii to Florida. The top six projects in dollar value were the HNL Consolidated Car Rental Facility — Honolulu ($315 million); Marquette Replacement Hospital — Marquette, MI ($300 million); East pier 5 & 6/Pier One Mixed Use — Boston ($275 million); Fort Myers Beach harbor Dredging — Fort Myers, FL ($241 million); UTD Student Housing Phases 6 & 7 — Richardson, TX ($176 million); Athletes Village — Minneapolis ($166 million).
Last month, Dodge Data & Analytics reported the value of construction starts between April and May increased 5% to a seasonally adjusted annual rate of $636.7 billion. And the Dodge Momentum Index, which predicts future construction activity, bumped up 2.4% in May. However, the Commerce Department reported earlier this month that construction spending slipped 0.8% in May to a seasonally adjusted annual rate of $1.14 trillion.
The drop in heavy engineering/civil construction coincides with ongoing concerns over the ability of governments to fund their transportation projects. Illinois and Minnesota are just two states recently suffering the consequences of political disputes threatening necessary project funding.
- ConstructConnect ConstructConnect’s June Starts Rise at Usual Seasonal Pace
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