June Construction Declines Slightly, Commercial Building Shows Gains
July 23, 2012

Last month's total construction projects fell 1 percent, at an adjusted annual rate of $446.1 billion and the nonresidential sector has experienced "a moderate loss of momentum" following improvement in May 2012, according to the latest monthly report from McGraw-Hill Construction. However, despite the overall reported drop, several commercial building sectors are projecting gains in activity.

Nonresidential building declined 4 percent in June, with an annual rate of $148.7 billion after a 12 percent increase in May, according to McGraw-Hill. The commercial sector included a drop last month in office construction by 31 percent, a 4 percent increase in store construction, a 1 percent rise in warehouse construction and a 10 percent drop in manufacturing plant construction while the institutional sector showed overall gains in educational building by 4 percent, healthcare construction by 13 percent and church building by 41 percent. The public buildings sector decreased 13 percent and transportation terminals dropped by 40 percent.

"The construction start statistics for the most part continue to hover within a set range, showing gains for some project types but further weakness for other project types," says Robert Murray, vice president of economic affairs for McGraw-Hill Construction. "… Aside from the lift coming from this year's nuclear power projects, total construction activity during the first half of 2012 has basically shown a hesitant up-and-down pattern."

He adds, "On the plus side, gains are being reported for several commercial building categories, and the strengthening trend for multifamily housing is now being joined by moderate growth for single-family housing. On the negative side, such institutional project types as educational buildings and healthcare facilities continue to weaken, along with further declines for several public works categories."

The continuing fall of total construction comes after a decrease of 16 percent in May, which followed a two-month increase in prior months of March and April - the sharp increase is attributed to two nuclear power projects in Waynesboro, Ga., and Jenkinsville, S.C., according to McGraw-Hill.

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