The Building Tradesman Newspaper

Friday, June 06, 2014

Construction starts to pick up some steam

By The Building Tradesman

U.S. construction through the first four months of the year came in at $158 billion, a level “slightly ahead of last year’s pace,” according to McGraw Hill Construction.

“With construction starts now climbing for two months in a row, it’s become more apparent that some of the lackluster activity in early 2014 was due to tough winter weather conditions,” stated Robert A. Murray, chief economist for McGraw

Hill Construction, on May 21. “On the plus side, nonresidential building is strengthening once again, after slipping in recent months. The commercial and manufacturing categories are regaining momentum, while institutional building is making the transition to an up-and-down pattern after its steady decline over the past five years.”

Multifamily housing construction is also up compared to last year.   From month to month, April’s construction starts rose 3 percent over the level in March.

Murray said on the flip side, 2014’s total construction volume is being “restrained” by a more subdued pace for public works, given the comparison to last year’s

elevated amount and the uncertain prospects for getting new transportation legislation passed. “Another cautionary note,” he said, “is related to single-family housing, which through the first four months of 2014 had yet to move beyond the modest erosion that emerged towards the end of last year.”

Meanwhile, looking at local areas, “construction employment appears to be rebounding in many parts of the country,” said Ken Simonson, the Associated General Contractors’ chief economist. An AGC report issued May 27 said construction employment expanded in 220 metro areas, declined in 70 and was stagnant in 49 between April 2013 and April 2014.

Michigan enjoyed a healthy 4 percent gain in construction employment between April 2014 and April 2015, an increase of 5,400 workers. Leading the way in Michigan: Monroe was ranked No. 5 and Flint No. 7 in the nation for construction employment gains during that one year period. Healthy gains in employment were also found in Grand Rapids/Wyoming and Battle Creek (tied for the rank of No. 17 nationally).

The AGC said signs that the federal government is again ready to invest in aging infrastructure should provide more stability for a construction industry that has yet to fully recover from its years-long downturn. Last month the Water Resources Reform & Development Act, which provides funding for vital waterways, port and flood control projects, passed the House and Senate with overwhelming bipartisan support. And a Senate committee recently backed new surface transportation legislation to fund highway, bridge and transit improvements.

“After years of declining public sector demand for construction that has partly offset growing private sector demand, Washington officials seem open to investing in our aging infrastructure,” said Stephen E. Sandherr, the AGC’s chief executive officer. “Passing a new highway and transportation bill would certainly help boost construction employment in many parts of the country.”