ConstructConnect announced today that November’s level of U.S. construction starts, excluding residential activity, was $23.4 billion, a plunge of -22.2% versus the dollar volume in the period before. October-to-November’s long-term average decline, on account of seasonality, has been a much smaller -2%. (Looking ahead, November to December is usually a bigger drop, -5.0%).

November of this year compared with November of last year was also a decline, but one that was less dramatic -8.5%. Year-to-date starts, though, stayed on the positive side of the ledger, at +8.0% versus their volume through the same January-to-November time frame of 2015.

The monthly starts statistics have been sharply up and down of late. They were -24.3% in September, but +16.5% in October. Compared with November’s average performance during the previous five years, 2011 to 2015, the latest result was remarkably consistent, +1.6%.  

The starts figures throughout this report are not seasonally adjusted (NSA). Nor are they altered for inflation. They are expressed in what are termed ‘current’ as opposed to ‘constant’ dollars.  

‘Nonresidential building’ plus ‘engineering/civil’ work accounts for a considerably larger share of total construction than residential activity. The former’s combined proportion of total put-in-place construction in the Census Bureau’s October report was 60%; the latter’s was 40%.

View this information as an infographic.

ConstructConnect’s construction starts are leading indicators for the Census Bureau’s capital investment or put-in-place series. Also, the reporting period for starts (i.e., November 2016) is one month ahead of the reporting period for the investment series (i.e., October 2016.)

After month-to-month net jobs gains in September (+26,000) and October (+14,000), employment in construction rose again in November (+19,000), according to the latest Employment Situation Report from the Bureau of Labor Statistics (BLS). The last time the sector’s payroll contracted was in August, -6,000. The year-over-year employment gain in construction has been +2.4%, which has been faster than the total U.S. jobs advance of +1.6%. But job creation in construction has been slowing since December 2014’s best rise of +6.1%.

There are two other data series with close ties to construction work that appear in Table B-1 of the monthly Employment Situation Report. As a ‘leading’ indicator, – i.e., before there can be field activity, projects must be rendered into working drawings by design professionals − the total number of jobs in architectural and engineering services in November was +2.1% year over year. In nominal terms, they have now climbed to a perch near the same level as when they were at their previous peak in February 2008.  And as a ‘coincident’ indicator, the total number of positions at retail outlets specializing in selling building materials and supplies was +3.5%.

Construction’s November jobless rate (NSA) was 5.7%, down from 6.2% 12 months ago.  

November’s pullback in total month-to-month starts (-22.2%) resulted from widespread declines among the three major type-of-structure categories. Heavy engineering/civil (-31.1%) was worst. Institutional (-23.0%) was also down markedly. Commercial (-6.3%) wasn’t as bad. Smaller-volume industrial (-52.4%) was less by half, but this is a category that often displays wide swings in any given month, depending on the presence or absence of a mega project or two.

November 2016’s -8.5% descent relative to November 2015 was also led by engineering (-18.1%), followed by institutional (-7.7%) and commercial (-1.6%). Industrial was +64.1%.

As for year-to-date starts in 2016 (+8.0%), there have been almost equal measures of improvement in institutional (+12.9%) and commercial (+12.1%) work, with engineering staying essentially flat (+0.6%). Industrial (-18.0%) has strayed off the path and fallen behind.

At nearly 60%, the ‘schools/colleges’ subcategory has dominated institutional work so far this year. November, however, was a spotty month for starts on educational facilities. They were -28.2% month over month (m/m); and -15.7% year over year (y/y); but +10.6% year to date (ytd).

The next biggest slice of the institutional pie belongs to ‘hospital/clinic’ starts (a 16% share). In the latest month, they surged ahead +52.2% m/m, which lifted them to +14.9% ytd, even though they fell -14.4% compared with November of last year. ‘Nursing and assisted living’ starts were -16.8% m/m in the latest period, but were an impressive +53.4% y/y and +41.8% ytd.

Within commercial work, ‘retail/shopping’ starts have occupied first place (with a 26% share) among subcategories with 2016 almost over. In November, they faltered -42.4% m/m and -30.3% y/y, but were still up +26.8% ytd. ‘Private offices’ (a 16% share) displayed a similar pattern: -58.9% m/m; and -10.5% y/y; but a resounding +17.6% ytd. ‘Government offices’ (an 11% portion) were -7.3% m/m; but +25.5% y/y; and +17.6% ytd. ‘Hotel/motel’ starts (a 14% slice) were uniformly and pleasingly upbeat: +115.9% m/m; +65.9% y/y; and +12.2% ytd.

‘Road/highway’ starts are the biggest subcomponent (a 43% share) of the heavy engineering type-of-structure category. In the latest month, they disappointed m/m (-33.6%) and y/y (-15.0%), but they retained an improvement ytd (+2.4%). ‘Bridges’ likewise faltered m/m (-13.0%) and y/y (-25.9%), while staying better ytd (+17.1%). ‘Water/sewage’ starts (with a 25% or one-quarter share) also followed a familiar route; -30.6% m/m; and -19.4% y/y; but +7.1% ytd.

Table 2 re-orders and provides more detail on some of the type-of-structure categories in Table 1. The reasons for this ‘second view’ are set out in the footnote.

Among the 12-month moving average trend graphsp, the ‘miscellaneous civil (e.g., power, etc.)’ curve has seriously nosedived over the past several months, ‘retail’ has more recently retreated after a lofty climb and private office buildings have eased somewhat. ‘Schools/colleges’, ‘roads/highways’ and ‘bridges’ appear uncertain as to the direction to take.

With respect to compensation increases as reported in November’s Employment Situation Report, construction nearly matched or bettered economy-wide gains. Including supervisory personnel, average year-over-year earnings increases were +2.5% hourly and +2.2% weekly for all jobs. For the ‘hard hat’ contingent on its own, they were +2.4% and +2.7% respectively. For production workers only (i.e., omitting bosses), the all-jobs earnings jumps were +2.4% hourly and +2.1% weekly. Construction was a nice step ahead at +3.2% both hourly and weekly.

The value of construction starts each month is summarized from ConstructConnect’s database of all active construction projects in the U.S. Missing project values are estimated with the help of RSMeans’ building cost models.

ConstructConnect’s nonresidential construction starts series, because it is comprised of total-value estimates for individual projects, some of which are ultra-large, has a history of being more volatile than many other leading indicators for the economy.

A “start” is determined by taking the announced bid date and adding a short time lag (30 to 60 days). ConstructConnect continues to follow the project via its network of researchers. If it is abandoned or re-bid, the start date is updated to reflect the new information.

Click here to download the Construction Industry Snapshot Package – November 2016 PDF.

Click here for the Top 10 featured construction projects in the U.S. – November 2016.

Click here for the Nonresidential Construction Starts Trend Graphs – November 2016.

TABLE 1: VALUE OF UNITED STATES
CONSTRUCTION STARTS – NOVEMBER 2016
YEAR TO DATE
(CONSTRUCTCONNECT)

Source: ConstructConnect Research Group and ConstructConnect.
Table: ConstructConnect.

TABLE 2: VALUE OF UNITED STATES
CONSTRUCTION STARTS
CONSTRUCTCONNECT INSIGHT VERSION
– NOVEMBER 2016
Arranged to match the alphabetical category drop-down menus in INSIGHT

Table 1 conforms to the type-of-structure ordering adopted by many firms and organizations in the industry. Specifically, it breaks nonresidential building into ICI work (i.e., industrial, commercial and institutional), since each has its own set of economic and demographic drivers. Table 2 presents an alternative, perhaps more user-friendly and intuitive type-of-structure ordering that matches how the data appears in ConstructConnect’s on-line product ‘Insight’.

Source: ConstructConnect.
Table: ConstructConnect.

TABLE 3: VALUE OF UNITED STATES
NATIONAL
CONSTRUCTION STARTS – OCTOBER 2016 – CONSTRUCTCONNECT
Billions of current $s, not seasonally adjusted (NSA)

Data Source and Table: ConstructConnect.

TABLE 4: U.S. YEAR-TO-DATE REGIONAL STARTS
NONRESIDENTIAL CONSTRUCTION
* — CONSTRUCTCONNECT

*Figures above are comprised of nonres building and engineering (i.e., residential is omitted).

Data Source and Table: ConstructConnect.