November Construction Falls 9%
New York, N.Y. – December 16, 2009 – At a seasonally adjusted annual rate of $405.0 billion, new construction starts in November dropped 9% from the previous month, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. Nonresidential building retreated after October’s elevated activity, and nonbuilding construction (public works and electric utilities) also settled back. Meanwhile, residential building in November held steady with its October pace. Through the first eleven months of 2009, total construction on an unadjusted basis came in at $381.0 billion, down 28% from the same period a year ago.
The November statistics lowered the Dodge Index to 86 (2000=100), after the 95 reported for October, which was the highest reading for the Index so far in 2009. “During the spring, the construction start statistics made the transition from steady decline to more of an up-and-down pattern, and November’s pullback following the strong gain in October is a continuation of that pattern,” stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. “Accordingly, even with the November decline, the evidence of recent months suggests that overall construction activity has at least stabilized at a low level. Single family housing is no longer exerting a downward pull, and the federal stimulus act to this point has supported greater construction of highways, bridges, river/harbor development, and courthouses. At the same time, the negatives of weak employment, tight bank lending, and diminished state fiscal health continue to depress most of the nonresidential building structure types as well as multifamily housing.”
Nonresidential building in November fell 18% to $146.1 billion (annual rate). The manufacturing plant category in November plunged 85% from its exceptional volume in October, which reflected the start of a $1.1 billion oil refinery expansion in Illinois. The commercial sector in November revealed further weakness for these structure types – stores, down 17%; warehouses, down 22%; and hotels, down 34%. The office category in November was able to register a 3% gain, lifted by the $747 million renovation of the United Nations Secretariat Building in New York NY. Without this very large project, the office category in November would have fallen 44% from its October amount, which featured groundbreaking for three office projects valued each in excess of $100 million.
The institutional sector in November was dampened by reduced activity for healthcare facilities, down 20%; dormitories, down 41%; and amusement-related projects, down 57%. While losing momentum, the healthcare facilities category in November did include the start of these large projects – a $150 million medical center expansion in Winchester VA, the $132 million clinic portion of a $250 million health science complex in Los Angeles CA, and a $100 million critical care facility in Paterson NJ. On the plus side, the institutional sector in November showed a 6% increase for educational buildings, helped by a $132 million community college complex in New Haven CT. The public buildings category in November edged up 1%, supported by groundbreaking for a $117 million courthouse in Staten Island NY. Also showing November gains were churches, up 3%; and transportation terminals, up 21%.
For the first eleven months of 2009, nonresidential building was down 34% from the same period a year ago. The commercial sector fell 48%, as the result of these year-to-date declines – offices, down 39%; stores, down 44%; warehouses, down 63%; and hotels, down 66%. The manufacturing plant category in the January-November period plummeted 67%. The institutional sector showed a comparatively mild 16% downturn in this year’s first eleven months, with weaker activity for educational buildings, down 19%; and healthcare facilities, down 34%. Two institutional structure types were able to register year-to-date gains – public buildings, up 14%; and transportation terminals, up 38%.
Nonbuilding construction, at $131.3 billion (annual rate) in November, dropped 7% from October. The most pronounced decline for the month was electric utility construction, which retreated 37% after October’s heightened amount. Even with this downturn, the electric utility category did have several large projects entered as November starts, including a $700 million natural gas power plant in New York and a $400 million wind farm in Texas. The public works categories in November showed a mixed performance. Highway construction settled back 11% after its 12% gain in October, and decreased contracting was also reported for water supply systems, down 8%; and miscellaneous public works (site work and mass transit), down 26%. In contrast, river/harbor development jumped 46% in November, with much of the lift coming from more hurricane reconstruction efforts in the New Orleans LA area. Bridge construction climbed 33%, helped by large projects in Washington DC ($156 million), New York ($140 million), and California ($106 million). Sewer construction grew 14%, boosted by a $192 million waste treatment facility in New York.
During the January-November period of 2009, nonbuilding construction was 12% below the same period a year ago. Electric utility construction dropped 47% from its record pace in 2008. Year-to-date declines were also shown by sewer construction, down 22%; water supply systems, down 20%; and miscellaneous public works, down 8%. Year-to-date increases were reported for highways, up 5%; and bridges, up 8%; with much of the upward push coming from the federal stimulus funding. River/harbor development work advanced 27% year-to-date.
Residential building in November came in at $127.6 billion (annual rate), essentially unchanged from October. Single family housing edged up 1% after slipping 2% in October, as it regained the very gradual upward trend that’s been present since April. The November pace for single family housing was still 11% below the monthly average for 2008. Multifamily housing in November dropped 6%, falling back after a brief upturn in October. The largest multifamily project entered as a November start was a $45 million townhouse complex in Stafford VA, considerably smaller than the large projects in excess of $100 million that typically reached groundbreaking in recent years. The November pace for multifamily housing was 52% below its monthly average for 2008.
During the first eleven months of 2009, residential building was 34% less than the same period a year ago. Single family housing fell 26% year-to-date, as the result of this performance by geography – the South Central, down 18%; the Midwest, down 23%; the West, down 28%; the Northeast, down 29%; and the South Atlantic, down 33%. Multifamily housing on a year-to-date basis plunged 58%, as the result of this performance by geography – the Midwest, down 27%; the South Central, down 52%; the Northeast, down 57%; the South Atlantic, down 65%; and the West, down 70%.
The 28% decline for total construction starts at the national level during 2009’s January-November period was reflected in similar declines for total construction at the five region level. The year-to-date reductions for total construction by region were as follows – the South Central, down 26%; the Northeast, down 27%; the Midwest and West, each down 28%; and the South Atlantic, down 29%.
November 2009 Construction Starts
NOVEMBER 2009 CONSTRUCTION STARTS
MONTHLY SUMMARY OF CONSTRUCTION STARTS
Prepared by McGraw-Hill Construction Research & Analytics
Monthly Construction Starts
Seasonally Adjusted Annual Rates, In Millions of Dollars
| November 2009 | October 2009 | % Change | |
| Nonresidential Building | $146,074 | $177,744 | -18 |
| Residential Building | 127,612 | 127,224 | -0- |
| Nonbuilding Construction | 131,280 | 141,836 | -7 |
| Total Construction | $404,966 | $446,804 | -9 |
The Dodge Index
(2000=100, Seasonally Adjusted)
November 2009 ...................... 86
October 2009 ........................... 95
YEAR-TO-DATE CONSTRUCTION STARTS
Unadjusted Totals, In Millions of Dollars
| 11 Mo. 2009 | 11 Mo. 2008 | % Change | |
| Nonresidential Building | $152,132 | $229,323 | -34 |
| Residential Building | 102,418 | 154,563 | -34 |
| Nonbuilding Construction | 126,469 | 143,684 | -12 |
| Total Construction | $381,019 | $527,570 | -28 |
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