Construction rises one percent in May

Pit & Quarry, August, 2004

At a seasonally adjusted annual rate of $556.1 billion, new construction starts in May were up 1 percent compared to the previous month, it was reported by McGraw-Hill Construction, a division of The McGraw-Hill Companies. Nonresidential building registered its strongest performance so far in 2004, outweighing a modest retreat for housing and a more substantial decline for nonbuilding construction (public works and electric utilities).

May's data lifted the Dodge Index to 167, up from the revised 166 for April. During the first two months of 2004, the Dodge Index had averaged 160, down from the 165 mean for the second half of 2003. The subsequent three months have seen the Dodge Index move back slightly above the 165 mark.

"The construction industry has picked up the pace in recent months," says Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. "Single family housing continues to be very strong, and now nonresidential building is beginning to see more sustained improvement, marking a change from its weakening trend over the past three years. The stronger economy is helping the nonresidential structure types, but at the same time there's concern that rising prices for building materials--steel, lumber and now cement--will dampen the emerging nonresidential expansion."

Nonbuilding construction in May dropped 9 percent to $78.6 billion. Much of the nonbuilding retreat was the result of an 88 percent plunge for electric utilities, following the strong amount of new power plant starts reported during March and April.

During the first five months of 2004, total construction on an unadjusted basis was up 10 percent relative to the same period in 2003. Residential building led the way with a 21 percent gain, continuing to benefit from the comparison to its more subdued performance in the early months of last year. Nonresidential building in the January-May period was down 2 percent from a year ago, while nonbuilding construction was down 5 percent.

On a regional basis, total construction in the first five months of 2004 performed as follows--the South Atlantic, up 20 percent; the Midwest, up 8 percent; the West, up 7 percent; the South Central, up 5 percent; and the Northeast, up 3 percent.

Year-to-Date Construction Contract Value
Unadjusted Totals, in Millions

                           5 Mo. 2004   5 Mo. 2003   % Change

Nonresidential Building       $59,847      $61,104      -2
Residential Building          132,058      108,915      21
Nonbuilding Construction       35,212       37,163      -5
Total Construction           $227,117     $207,182      10