By Alex Carrick for ConstructConnect
ConstructConnect announced that June construction starts, excluding residential activity, fell -13.7 percent versus May. The usual May-to-June change, due to seasonality, is +4.5 percent.
June of this year versus a strong June of last year was -16.3 percent. Standalone June of this year versus June’s average level over the previous five years (2012-2016 inclusive), however, was a more upbeat +2.8 percent.
Year-to-date starts through the first half of this year, compared with January-to-June of last year, stayed positive at +2.4 percent.
The starts figures throughout this report are not seasonally adjusted (NSA). Nor are they altered for inflation. They are expressed in what are termed ‘current’ as opposed to ‘constant’ dollars.
‘Nonresidential building’ plus ‘engineering/civil’ work accounts for a considerably larger share of total construction than residential activity. The former’s combined proportion of total put-in-place construction in the Census Bureau’s May report was 57 percent; the latter’s was 43 percent.
ConstructConnect’s construction starts are leading indicators for the Census Bureau’s capital investment or put-in-place series. Also, the reporting period for starts (i.e., June 2017) is one month ahead of the reporting period for the investment series (i.e., May 2017.)
According to the latest Employment Situation Report from the Bureau of Labor Statistics, the total number of jobs in construction climbed by +16,000 in June. The monthly average rise in on-site work so far this year has been +19,000, almost double the pace of +10,000 set in last year’s first half. Among industrial sectors, construction is tied with ‘professional and business services’ for best year-over-year percentage change in jobs, +3.1 percent. The +1.6 percent performance for all jobs in the economy is only about half as quick. Construction’s NSA unemployment rate in June was an exceedingly low 4.5 percent. In May, it had been 5.3 percent and in June 2016, 4.6 percent.
Employment in ‘architectural and engineering services’ rose by +5,000 jobs in June, yielding a year-over-year pickup of +3.8 percent. Healthy hiring by the design professions is a positive ‘leading indicator’ for construction.
There were nothing but declines month to month (m/m) in all four major type-of-structure subcategories. Industrial dipped the most (-36.7 percent), followed by heavy engineering/civil (-19.8 percent). Commercial also exhibited weakness (-14.8 percent), while institutional (-5.5 percent) retreated the least.
In a comparison of June 2017 with June 2016 (y/y), there was one subcategory that managed a confident forward stride, engineering at +16.3 percent. The others, though, took backwards steps progressing from -11.8 percent for institutional, to -27.2 percent for industrial, and -40.8 percent for commercial.
First-half 2017 versus first-half 2016 starts (i.e., year-to-date or ytd starts) have swung from a high of +25.2 percent for heavy engineering/civil to a low of -29.1 percent for industrial, with commercial (-5.6 percent) and especially institutional (i.e., a nearly ‘flat’ -0.9 percent) in the middle.
ConstructConnect’s nonresidential construction starts series, because it is comprised of total-value estimates for individual projects, some of which are ultra-large, has a history of being more volatile than many other leading indicators for the economy.
Read more at ConstructConnect.