Construction Activity Rises 4 Percent in June

While residential building held steady, nonresidential building and public works registered June gains. During the first half of 2002, total construction on an unadjusted basis was reported at $253.1 billion, unchanged from last year's corresponding amount.

Nonresidential building in June grew 4 percent to $160.2 billion. School construction, the largest nonresidential category by dollar volume, rebounded 7 percent after slipping back in May. An upward push also came from a 60 percent increase for public buildings, aided by the start of several large courthouses and detention facilities. Showing improvement from very weak levels in May were hotels (up 11 percent), office buildings (up 20 percent), and manufacturing buildings (up 27 percent). June also witnessed steady contracting for stores, but declines were posted by warehouses (down 4 percent), churches (down 7 percent), healthcare facilities (down 12 percent) and transportation terminals (down 52 percent).

Despite the June gain, nonresidential building during the first half of 2002 was down 11 percent from its year ago amount. The general weakness for nonresidential building has been largely the result of reduced contracting for commercial building, including stores (down 12 percent), warehouses (down 28 percent), offices (down 32 percent) and hotels (down 36 percent).

The institutional categories have fared better in 2002, with first half increases reported for healthcare facilities (up 29 percent), churches (up 6 percent), public buildings (up 1 percent) and transportation terminals (up 1 percent). School construction in the first half of 2002 was down 3 percent, but its level can still be viewed as very strong since the comparison is being made against last year's record high pace.

Residential building in June, at $237.4 billion, was unchanged from the previous month. Single family housing rose 1 percent, while multifamily housing retreated 7 percent. The single family market continues to be helped by the low cost of financing. The coming months may see homebuyer demand dampened by sagging consumer confidence and the sluggish job market, offsetting the boost from low mortgage rates, but such dampening has yet to become apparent to any significant extent.

Residential building during the first half of 2002 was up 8 percent compared to a year ago. This was the result of a 10 percent gain for single family housing, combined with multifamily housing holding steady with the prior year. Residential building witnessed a relatively uniform pattern across the five major regions during the first half of 2002 — the Northeast, up 10 percent; the South Atlantic, up 9 percent; the South Central, up 8 percent; the West, up 8 percent; and the Midwest, up 7 percent.

Nonbuilding construction in June jumped 16 percent to $115.3 billion. During the first half of 2002, nonbuilding construction was unchanged from its volume during the same period a year ago.

On a regional basis, the first half 2002 statistics for total construction compared to last year showed growth in the Northeast, up 5 percent; the Midwest, up 4 percent; and the South Atlantic, up 3 percent. The West and South Central posted declines in the January-June period, dropping 2 percent and 10 percent, respectively.