April Construction Advances 9 Percent Nationwide

The value of new construction starts in April climbed 9% to a seasonally adjusted annual rate of $553.5 billion, according to McGraw-Hill Construction, a division of The McGraw-Hill Cos.

Much of the increase came as the result of a strong performance by nonbuilding construction, which is comprised of public works and electric utilities. Nonresidential building showed moderate improvement in April while residential building stayed unchanged from its March pace. For the first four months of 2008, total construction on an unadjusted basis came in at $170.4 billion, down 17% from the same period a year ago. Excluding residential building, new construction starts in the first four months of 2008 rose 3%.

April’s data produced a reading of 117 for the Dodge Index (2000=100), up from a revised 108 for March, and equal to the average for January and February.

Nonbuilding Construction

Nonbuilding construction in April jumped 28% to $162.4 billion, reflecting gains for both public works (up 24%) and electric utilities (up 41%). Of the public works categories, the largest increase was reported for water supply systems, up 167%. The boost to the water supply category was provided by the start of a $1.3-billion water treatment plant in Westchester County, N.Y., as well as by $115 million for reconstruction of a water treatment plant in Phoenix. The water resources category also witnessed substantial growth, rising 74%, with the push coming from $200 million for a reservoir project in West Palm Beach, Fl., and $57 million for harbor dredging in Boston.

 After a strong March, sewer construction in April edged up an additional 2%, helped by the start of a $278-million water pollution control project in Brooklyn, N.Y.  April also saw a 21% rebound for bridge construction while “miscellaneous” public works rose 20%, lifted by the start of a $378-million light rail project in Denver and a $100-million oil pipeline in Minnesota. Running counter to April’s broad upward trend for public works was highway construction, which slipped 8%.

The boost provided to the April nonbuilding total by electric utilities came mostly from the start of one project—a $2.9-billion coal-fired power plant in Illinois.

Nonresidential Building

Nonresidential building in April grew 5% to $210.6 billion, after dropping 25% in March.

Healthcare facilities had a particularly strong April, jumping 41%, as five large hospitals reached groundbreaking in New York, Tennessee, Indiana, Maryland and Washington. Substantial gains were also registered by two of the smaller institutional structure types. The amusement category soared 82%, aided by the start of a $400-million convention center expansion in Philadelphia, plus the start of several large theater and performing arts facilities in California, Florida and Washington, D.C.

 Transportation terminal work climbed 52%, led by a $126-million terminal renovation at Miami International Airport and a $90-million terminal expansion at Washington Dulles International Airport.

Church construction also helped out, climbing 10% in April. On the negative side, the public buildings category fell 25% after an exceptional March. And, educational buildings (the largest nonresidential category by dollar volume) settled back 10% in April after heightened contracting in March.

The commercial structure types generally showed modest weakening in April. Office construction eased back 1%, although April did include the start of four sizeable projects, located in Washington, D.C., Atlanta and New York City.

Hotel construction in April dropped 5%, sliding for the second month in a row after the robust volume reported at the outset of 2008.

Warehouse construction in April edged up 1%, yet its pace so far in 2008 lags behind last year. Manufacturing plant construction in April climbed 63% after a weak March, as two large ethanol plants reached groundbreaking in North Carolina and Indiana.

Residential Building

Residential building, at $180.5 billion in April, was essentially unchanged from March.

Single-family housing continued to lose momentum, slipping 1%. Although the decline was relatively small, it did extend the downward trend that has been under way for over two years now. By major region, single-family housing in April showed further reductions in the South Atlantic, down 6%; the West, down 2%; and the South Central, down 1%; while modest improvement was reported in the Northeast, up 3%; and the Midwest, up 4%.

Multifamily housing in April increased 3%, helped by the start of four large projects in Chicago, Washington, D.C., Port Washington, N.Y., and Atlanta.

The 17% decline for total construction in the first four months of 2008 relative to last year was due to this pattern by sector—residential building, down 39%; nonresidential building, up 1%; and nonbuilding construction, up 5%.