Construction Put in Place Hits 6-Month High in November, AGC Economist Reports
The November total, $843 billion seasonally adjusted at annual rates, was the third straight increase and represented a 0.3% lift from October's upwardly revised $840 billion (initially reported as $835 billion). The November figure was 0.8% higher than in November 2001, and actual construction put in place for the first 11 months of 2002 was 0.3% ahead of the 11-month total for 2001.
Simonson cautioned that the Census Bureau, which issued the new numbers this morning, estimates that the average percentage change from preliminary estimate to first revision is +/-0.5%, meaning that the revised numbers could be substantially higher or lower. Components of the total show bigger swings.
"The year-to-date numbers reinforce trends seen for the past several months," Simonson said. "Private residential construction and public construction are each 6% higher than for the same period of 2001, while private nonresidential construction is off by 17%. Within the residential sector, single- and multi-unit new construction and improvements to existing properties are all 5-8% higher. Of the three biggest public categories, education structures are the standout--14% higher year-to-date, while highways and streets are unchanged and other public buildings are negligibly above the 2001 figure.
"On the private nonresidential side, only two categories are looking good: hospital and institutional buildings are up 14% year-to-date and educational buildings have grown by 8.5%. Of the three biggest categories in 2001, industrial has tumbled 45%, office 28%, and other commercial 7%."
Simonson added that more detailed data classifying structures by user type is available on the Census website. "The detailed data pinpoints some areas of strength not visible in the larger totals. The fastest growing private nonresidential category so far in 2002 has been galleries and museums, up 50%, followed by drug stores, +40%, sports and sports/recreation facilities, +32% and +29%, auto sales facilities, +21%, and hospitals, +20%. Unfortunately, aside from the $13 billion hospital category, these are all small niches ($1-2 billion per year). Even within the dismal manufacturing sector (down 45% overall year-to-date), one type, chemical plants, is up by 13% so far in 2002.
"State and local construction, which has risen by 11% for the first 11 months of 2002, will have a hard time maintaining that pace, given the several budget constraints facing state governments. Primary and secondary schools, which are up by 16%, should continue to do well, thanks to the record volume of bond issues that passed in November, many of which were for school construction and rebuilding. But higher education, up by 8% so far; highways and streets (-1% year-to-date); air, land and water transportation facilities (+10%); and amusement and recreation structures (+1%) may be headed down."
Simonson concluded, "Low mortgage rates and favorable demographics should keep single-family housing strong into 2003. But the ease of buying homes will reduce the number of potential renters. I expect a decline in multi-unit residential structures in the next few months."
The Census report for September can be viewed at www.census.gov/const/www/c30index.html. In addition, Census has posted more detailed data, classified by end user, at www.census.gov/pub/const/C30/newtc.html.