The Building Tradesman Newspaper

Friday, February 03, 2012

U.S. building activity stumbles in 2011

By The Building Tradesman

The nation’s building industry has “essentially stabilized at a low level,” according to the latest report by McGraw-Hill Construction.

The year-end 2011 report was released Jan. 23, and revealed that new U.S. construction starts fell 3 percent in the month of December, and overall in 2011 slipped 2 percent to $421.4 billion in spending compared to 2010. That’s after U.S. construction starts gained 1 percent in 2010 over 2009.

“The pace of new construction starts continues to fluctuate within a set range, showing stability in a broad sense but not yet making the transition to renewed expansion,” stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. “Gains for a few project types are being offset by continued weakness for other project types, with the result that total construction is experiencing an extended bottom.”

McGraw-Hill reported that there was stronger activity for multi-family housing, manufacturing plants, electric utilities, and even some commercial property types (hotels and warehouses). But those gains were offset by further declines for the publicly-financed parts of the construction industry, institutional building and public works, as well as by more weakness for single-family housing.

For 2012, McGraw-Hill said to expect “a mixed pattern” based on project type. “The pluses may be able to outweigh the minuses,” Murray said, “should the recent pickup in employment growth be accompanied by greater real estate lending by

the banking industry, but this year will also see the constraint of diminished federal and state funding support for construction programs.”

By sector, 2011 residential building came in at 2 percent above 2010 levels.

Stronger activity was reported for multi-family housing, manufacturing plants, and some commercial property types (hotels and warehouses). There was a 46 percent surge for electric utility construction, helped by a sharp expansion for solar and wind power facilities.

But, single-family housing retreated 2 percent in dollar terms. Non-building construction (sewer and water) dropped 3 percent. The public works sector fell 15 percent, with waning support from the federal stimulus.

The 2 percent decline for total U.S. construction starts at the national level during 2011 was the result of mixed behavior at the five region level. Decreased activity for total construction was shown by three regions: the South Central (-4 percent); the Midwest (-9 percent); and the Northeast (-12 percent). Increased activity for total construction was reported for two regions: the South Atlantic and the West, each up 6 percent.