Construction Starts in December Climb to 23 Percent – McGraw-Hill Construction

Construction growth overall for 2012 benefited from starts of two nuclear power projects in the South Atlantic which pushed the region’s yearly level up by 19 percent. The Midwest grew 9 percent, South Central rose 7 percent, and the Northeast showed a gain of 2 percent. The West was the only region showing a decline at 7 percent below 2011 levels.

The Dodge Index of New Construction Starts was at 112 for December, up from a revised 91 in November. The Dodge Index for the year 2012 averaged 98. (A rating above 100, established in 2000, indicates growth.)

Nonresidential Building

December was a positive month for nonresidential building with growth registering in almost all sectors. The commercial sector showed a strong gain of 53 percent in office construction, led by three major building projects in New York City, New Cumberland PA, and Dallas totaling $875 million. Store construction rose by 37 percent with a $234 million infusion from retail projects in Hudson Yards and Saint Ann MO.

Warehouse construction was weak in November but soared 84 percent in December. Hotel building, however, was flat for the month.
 
A $500 million natural gas processing facility in Ohio and a $1.4 billion fertilizer plant in Iowa gave a 177 percent jump to plant construction in December following a very weak November.

For institutional building, healthcare facilities grew by 12 percent while educational buildings gained 4 percent in December. Transportation terminals and churches recovered from a depressed November with gains of 77 percent and 45 percent, respectively. The public buildings category was up by 56 percent and the amusement category by 22 percent.

Overall nonresidential building fell in 2012 by 9 percent to $149 billion. Institutional categories fell 12 percent for the year, down from an 11 percent drop in 2011. Manufacturing plant construction plummeted 33 percent below levels in 2011. Only the commercial sector grew, albeit slower than 2011, to a gain of 5 percent bolstered by construction of stores, hotels, and warehouses. Office construction for the year was down 7 percent.

Residential Building

McGraw-Hill data showed residential building increased 6 percent to a $198.5 billion annual rate in December. Single family housing rose by 3 percent in December and had gains in 11 out of 12 months for the year. Building increased in all five major regions for the year with the West showing the highest gain at 40 percent and the Northeast the lowest at 15 percent.

Multifamily housing showed significant strength in 2012 with a 29 percent jump for the year, and a 15 percent gain for December. The West had the highest gain at 46 percent and the Midwest showed the lowest gain at 10 percent.

Nonbuilding construction

December nonbuilding construction soared 42 percent to a $142.5 billion annual rate, strongly rebounding from its low November level.

The electric utility category had a strong comeback from a weak October and November with a 635 percent jump in December. The unusually high spike was attributed in part to a $950 million transmission line project in New Jersey and Pennsylvania, a $945 million solar power project in California and two nuclear plant projects.

Many sectors that were down in November did better in December including public works and environmental categories.

Highway construction increased by 8 percent in December due to project starts in Virginia and New Jersey. Bridge construction declined 6 percent.

For the total year 2012, nonbuilding construction grew 2 percent to $150.5 billion with electric utility construction primarily responsible–gaining 9 percent in 2012 following a 53 percent increase in 2011. A 1.0 percent drop in public works construction was offset by a 35 percent gain in miscellaneous public works construction attributed to pipeline and rail projects. Highway, bridge, harbor and sewer construction all declined in 2012. Water supply construction rose 7 percent from a weak 2011 level.