New construction starts in March jumped 23% to a seasonally adjusted annual rate of $482.4 billion, according to McGraw-Hill Construction, a division of The McGraw-Hill Cos. The increase came as the result of a sharp gain for electric utility construction, lifted in particular by work at a nuclear power plant facility in Georgia.
Meanwhile, public works construction and housing showed modest improvement in March, but nonresidential building lost further momentum. For the first three months of 2012, the amount of total construction starts on an unadjusted basis was reported at $94.2 billion, down 3% from a year ago. For the 12 months ending March 2012 versus the 12 months ending March 2011, total construction starts were basically unchanged.
The latest month's data boosted the Dodge Index to 102 (2000=100), up from a revised 83 for February. The annual average for the Dodge Index during both 2010 and 2011 was 91. The March construction start statistics included $8.5 billion estimated for work on Units 3 and 4 at the Vogtle nuclear power facility near Waynesboro, Ga. In February, the U.S. Nuclear Regulatory Commission approved a combined construction and operating license for Units 3 and 4, enabling construction work to begin on the two nuclear reactors. This follows more than $1.5 billion related to sitework for Units 3 and 4 that had been entered into the construction-start statistics during 2010 and 2011.
If the latest entry for the Vogtle nuclear facility project is excluded, the pace of construction starts in March would be down 3% to $380.4 billion (annual rate), producing a reading of 80 for the Dodge Index.
“Aside from the lift coming from electric utilities, the March statistics show that construction activity continues to hover within a set range, with gains for some project types being offset by weakness for other project types,” stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction.. “On balance, the construction industry can still be viewed as struggling to see renewed expansion take hold in a sustained and broad-based manner.”
Nonbuilding construction in March soared 79% to $212.9 billion (annual rate). Electric utility construction advanced 249%, led by the $8.5 billion for work at the Vogtle facility in Georgia. If this project is excluded from the March statistics, then non-building construction would be down 7% and electric utilities would be down 33%.
While the pace for electric utilities, minus the Vogtle project, was slower, March featured the start of several noteworthy alternative-energy projects. These included five large wind-power facilities located in Kansas ($783 million), Montana ($300 million), Illinois ($135 million), Oklahoma ($110 million) and Massachusetts ($90 million). The public works sector in March grew 4%, helped by a 27% rebound for highway construction after an especially weak February. The trend for highway construction remains downward, however, as March contracting came in 12% below this category’s average monthly pace during 2011.
Water supply construction was another public works category that rebounded after a weak February, rising 59% with the help of a $90-million water treatment plant in Texas. The other public works categories retreated in March, with sewer construction down 1%, bridge construction down 11%, river/harbor development down 15%, and miscellaneous public works (sitework, mass transit, pipelines, etc.) down 28%.
Residential building, at $146.7 billion (annual rate), grew 2% in March, maintaining the gradual if hesitant upward trend that’s been present since the second half of last year. Multifamily housing in March increased 5%, continuing to regain upward momentum after its pause at the start of 2012. Large projects that contributed to the multifamily rise in March included a $184-million apartment building in Brooklyn, N.Y., a $63-million apartment building in Boston, and a $38-million apartment building in Seattle. Single-family housing in March edged up 1%, regaining some strength after slipping back in the previous two months. Compared to their average monthly pace for all of 2011, multifamily housing in March was up 13% while single-family housing was up 16%.