New Construction Declines in May

Excluding some nuclear power projects in March and April, the level of national construction activity this year is actually running slightly behind 2011. Recent trends, however, have turned upward after a weak start to 2012.

New construction starts in May were down following strong showings in April and May, but the industry is still showing improvements over the year previous.

According to McGraw-Hill Construction, new construction starts reached a seasonally adjusted annual rate of $444.9 billion in May, down 16 percent after increasing 23 percent in March and 11 percent in April. The rate for the five elapsed months of 2012 is six percent above the same timespan the year before.

The two months prior were buoyed by nuclear power plant projects in Georgia and South Carolina, and combined with a reduction in public works spending, nonresidential building in May could not measure up. (Excluding the nuclear projects, the trend for construction starts would have been down 3 percent in March, up 14 percent in April, and up 4 percent in May.)

''The picture of a construction market that's struggling to achieve upward momentum, with gains for some project types but losses for other project types, continues to hold true,'' said Robert Murray, vice president of economic affairs for McGraw-Hill Construction. ''Housing is edging upward, as earlier advances for multifamily housing are now being joined by gradual growth for single family housing. The commercial building sector has registered slight improvement from the extremely depressed amount back in 2010, but its upturn remains tenuous.''

Residential building increased 8 percent in May, to an annual rate of $158.9 billion (seasonally adjusted), and has grown 24 percent year-to-date. Single-family housing has had a similar climb, adding 23 percent year-to-date, and multi-family housing is up 26 percent over the same period. Non-residential building has fallen 18 percent year-to-date, driven largely by steep declines in institutional building and manufacturing plants.