The value of December nonresidential construction starts fell 6.9% from November to $22.2 billion, a slightly steeper decline than the typical, seasonal November-December decline of 5%, according to a CMD report. Nonresidential starts were down 7% from December 2014, but they were up 9.2% on a five-year December average.
Commercial (-4%), institutional (-22.5%) and heavy engineering starts (-6.2%) were all down month-to-month, but industrial, with its traditional lower dollar volume, soared 512.9%, spurred on in part by the start of Volkswagen’s sport utility manufacturing plant in Chattanooga, TN. According to CMD, industrial is greatly influenced by these kinds of megaprojects, causing start data for this category to exhibit huge swings. Comparing these categories with the same month in 2014, commercial (-8.9%), institutional (-21.6%) and heavy engineering (-3.3%) starts were down, but industrial starts were up 238.3%.
Road/highway, the most significant segment of the heavy engineering category at 42% of all activity, saw month-to-month starts fall 13.8%, with year-to-year starts down 5.8% and year-to-date starts up 9.2%. The school/college segment commanded the institutional segment during 2015 with a 60% share, but education facility starts were down 18.7% month-to-month in December, with a year-to-year decline of -34% and a year-to-date decline of -4.5%. Commercial was propped up by the warehouse segment, which includes large data and call center projects. This segment saw a month-to-month increase of 89.6%, but declines in both year-over-year (-7.8%) and year-to-date (-32.65%).
For the year ending 2015, starts increased 1.9% from the same period ending 2014. Month-to-month, total jobs in architectural and engineering services were up 3%, and year-over-year, they were up 2.5%. Full year 2015 starts saw gains in the engineering (10.9%) and industrial (32.8%) categories but declines in commercial (-4.2%) and institutional (-7%).
Holding the first and second spots on CMD’s Top 10 projects list are the Garvies Point Museum and Preserve ($1 billion) in Glen Cove, NY, and the Gaylord Rockies Resort and Convention Center ($800 million) in Aurora, CO.
CMD noted that the latest Employment Situation Report from the Bureau of Labor Statistics (BLS) reported a 45,000-job increase in the total number of construction jobs in December. Following October and November, this was the third straight month of five-figure employment increases in the industry. According to the BLS, year-over-year employment in construction was up 4.2% for 2015, ahead of all major employment sub-categories. In comparison, the total national employment increase was 1.9%.
Despite the strong employment numbers, an AGC survey found that construction industry employers are less optimistic about their hiring prospects this year than at the beginning of 2015. In the survey, 71% of respondents said they plan to increase the number of personnel in 2016, down from 80% in January 2015. According to the AGC, this decrease is because of the labor shortage, increased competition, additional government regulations and higher healthcare costs.