The Building Tradesman Newspaper

Friday, August 09, 2013

U.S. construction grinds gears, looks for traction

By The Building Tradesman

At halftime of 2013, U.S. construction starts were down $233.8 billion, or 2 percent, compared to the first six months of 2012.

The numbers are much better, however, if work in the electrical utility industry is excluded: without those numbers, total construction starts for the first half of 2013 would be up 9 percent.

“The first half of 2013 revealed a mixed performance by project type, producing a hesitant pattern for total construction starts,” said Robert A. Murray, vice president of economic affairs for McGraw Hill Construction, which released the numbers on July 22. “On the plus side, the housing market continues to strengthen, and it should be able to register further gains this year even with the recent hike in mortgage rates. Commercial building continues to slowly advance, and public works construction to this point has not seen much dampening as the result of the sequester.

“However, on the negative side, the retreat for institutional building has turned out to be steeper than expected, manufacturing plant construction has weakened, and new electric utility starts have plunged from last year’s record pace. Assuming the downward pull from the negative sectors in this year’s first half becomes less severe in the second half, then total construction starts for all of 2013 should still be able to register growth, but at just a single-digit pace in similarity to 2012.”

The 2 percent downturn for total construction starts at the U.S. level during the first six months of 2013 came from a varied pattern by geography. Greater activity for total construction was reported for the South Central, up 8 percent; the Northeast, up 7 percent; and the West, up 4 percent. Decreased activity for total construction was reported for the Midwest, down 5 percent; and the South Atlantic, down 18 percent.

Michigan breaks through with jobs gain

Michigan eeked out its first gains in construction employment in May and June 2013, and now employs 1 percent more construction workers than we did a year ago.

No, not much of a gain, but given Michigan’s recent history in construction activity, it’s a number that’s finally on the right side of the ledger. Until May, Michigan had steadily lost construction jobs from month to month in 2013, and dropped a total of 4,300 jobs in April 2013 compared to April 2012.

In June 2013, Michigan employed 136,400 building trades workers, a 1,100-worker gain compared to May 2013 and an increase of 1,400 vs. June 2012.

“Although construction activity remains extremely spotty, with strong residential activity offsetting lackluster private nonresidential investment and shrinking public construction spending, workers are being hired in more and more metro areas,” said Ken Simonson, the AGC’s chief economist. “There is widespread good news for now but the industry remains far below previous employment peaks in most markets.”

Overall the 1 percent increase in construction activity didn’t do much to move the meter: Michigan is still in the bottom half the states in terms of work opportunities. But the AGC says we do have two hot areas: Flint was ranked No. 8 in construction activity among 339 U.S. metro areas (up 18 percent in June 2013 vs. June 2012) and Muskegon/Norton Shores was ranked No. 12 (up 16 percent).

Less busy was the Niles/Benton Harbor region, ranked No. 335. Next lowest in the state were both Monroe and the Detroit-Livonia-Dearborn areas – both were down 5 percent from June 2012 to June 2013, ranking both regions No. 296 nationwide.