October Construction Jumps 12 Percent
November 23, 2011

The value of new construction starts advanced 12 percent in October to a seasonally adjusted annual rate of $469.8 billion, according to McGraw-Hill Construction (MHC) in New York, a division of The McGraw-Hill Cos. Much of the upward push came from nonresidential building, which was lifted by the start of a massive manufacturing project, as well as by broader strengthening across several structure types. Also contributing to the total construction gain in October was a slight increase for the housing sector. Meanwhile, nonbuilding construction in October stayed even with its elevated September amount, helped by the start of several large electric power plants. Through the first 10 months of 2011, total construction on an unadjusted basis came in at $355.6 billion, down 3 percent from the same period a year ago.

The October data produced a reading of 99 for the Dodge Index (2000=100), up from September's 89, and the highest level so far this year. "After registering an up-and-down pattern during the first seven months of 2011, the construction start statistics from August through October have, on balance, shown improvement," says Robert A. Murray, vice president of economic affairs for MHC. "Much of this has been related to the start of very large projects, such as October's huge manufacturing facility and several electric power plants. However, more sustained expansion for construction starts will require a supportive economic environment, which has yet to emerge. Job growth remains meager, and bank lending has picked up only slightly. Furthermore, tight fiscal conditions at all levels of government mean decreased funding for a wide range of publicly financed projects, and this will carry over into 2012."

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