ConstructConnect announced today that November’s volume of construction starts, excluding residential activity, was $25.8 billion. The month-to-month change versus October was -27.8%. Compared with November of 2016, though, this year’s latest month was about even, -0.7%.

The latest month’s starts included three mega projects of more than a billion dollars each totaling $4.3 billion. But that $4.3 billion still fell far short of the volume of mega project initiations that occurred in September and October. There were four projects in those two earlier months – a pipeline; an airline terminal; and two petrochemical plants − that combined for $23 billion.

November 2017’s starts relative to November’s average value in the previous-five-years, 2012 through 2016, was -0.5%. On the plus side, year-to-date starts have stayed upbeat. For January-November of this year, they have been +11.5% compared with the first eleven months of 2016.

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.

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‘Nonresidential building’ plus ‘engineering/civil’ work accounts for a 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 58%; the latter’s was 42%.

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 2017) is one month ahead of the reporting period for the investment series (i.e., October 2017.)

The total number of jobs in construction rose by +24,000 in November according to the latest Employment Situation report from the Bureau of Labor Statistics (BLS). The average monthly increase in ‘hard hat’ employment so far this year has been +16,000, a nice advance from 2016’s January-to-November figure of +13,000. Construction’s unemployment rate now sits at 5.0%. A year ago, it was 5.7%. The year-over-year performance of jobs in construction is presently +2.7%. Within subsectors, positions with residential specialty trade contractors are especially buyant, +3.6% year over year. Total employment in the U.S. economy is +1.4% year over year.

There have also been healthy year-over-year increases in employment in some other corners of the economy with close ties to construction. Staffing with real estate firms is +2.0% and with building material and garden supply stores, +2.2%. Most significant, however, is architectural and engineering services employment, +3.5%. Design work is a leading indicator for on-site activity since a set of assembly instructions must be compiled before construction can proceed.

November’s month-to-month (m/m) decline in overall starts (-27.8%) resulted from a big drop in the industrial type-of-structure category (-97.1% -i.e., there was no replacement for October’s outsized Shell petrochemical plant in Pennsylvania), with substantial declines in commercial (-29.1%) and institutional (-25.0%) as well. Heavy engineering, however, moved higher (+18.1%).

The flat (-0.7%) record of total nonresidential starts in November 2017 versus November 2016 (y/y) was due to declines in the industrial (-76.8%), commercial (-25.2%) and institutional (-18.0%) subuscategories being almost exactly offset by a surge in heavy engineering (+63.2%).

Year-to-date (ytd) total nonresidential starts, though, have stayed on the positive side of the ledger. Their climb (+11.5%) has been thanks to uplift from industrial (+80.5%) and engineering (+29.9%), while institutional has been tepid (+1.6%) and commercial has retreated (-3.9%).

Disaggregating type-of-structure categories further, ‘road/highway’ work has accounted for the largest share (37%) of engineering/civil so far this year. In November, ‘street starts’ were -17.0% m/m; a neutral +0.5% y/y; but +11.3% ytd. The second largest slice (21%) of civil belongs to ‘water/sewage’ and in the latest month, they were: -17.4% m/m; but +7.0% y/y; and +9.7% ytd.

‘Miscellaneous civil (power, etc.)’ (17% of total engineering) had a strong November: +233.7% m/m; +377.4% y/y; and +99.7% ytd. Two outsized projects in electric power generation and one ultra-large project in the energy sphere are highlighted in the Top 10 listing.

‘Airports’ (-71.8% m/m; -15.4% y/y; but +98.5% ytd) and ‘bridges’ (+16.6% m/m; +33.6% y/y; and +41.4% ytd) have also made important contributions to engineering starts to-date this year.

Within institutional, ‘schools/colleges’ (with a 54% share so far this year) have been preeminent. Groundbreakings on educational facilities in November were: -28.8% m/m; -16.3% y/y; and -1.6% ytd. Delving deeper, ‘college/university’ starts have been -11.3% ytd, but ‘junior/senior high school’ starts have been +12.9% ytd. ‘Hospitals/clinics’ form the second biggest slice of institutional (14%) and in the latest month they were uniformly weak: -17.9% m/m; -51.7% y/y; and -21.6% ytd. ‘Nursing/assisted living’ recovered some of that lost ground: -5.6% m/m; but +2.8% y/y; and +13.9% ytd. Two other micro-categories warrant special mention. In November, starts on ‘courthouses’ were +98.2% ytd and on ‘prisons’, +60.2% ytd.

‘Private offices’ (with a 20% share) have almost tied ‘hotels/motels’ (a 21% share) for first-place dominance among commercial subcategories. In the latest month, the former was: +111.8% m/m; +39.1% y/y; and +1.2% ytd. The latter was -30.9% m/m; and -12.0% y/y; but a bullish +36.9% ytd. Another match within commercial has been ‘retail/shopping’ and ‘warehouses’, each with a 14% share. They’ve been moving in opposite directions ytd, with ‘warehouses’ +28.5% and stores, -48.3%. ‘Sports/convention center’ starts ytd have been +73.2%.

The six graphs show 12-month moving average trend lines for major type-of-structure categories. Over the past year (and sometimes more), ‘private offices’ and ‘hospitals’ have been easing, ‘retail’ has been plummeting, and ‘bridges’ and ‘miscellaneous civil’ have been soaring.

The degree of restraint in year-over-year wage gains in the U.S. continues to be a surprise given that the nation’s total labor force unemployment rate of 4.1% is at a seventeen-year low. As recorded in Table B-3 of November’s Employment Situation report, average hourly and average weekly earnings for all workers, including supervisory personnel, were +2.5% y/y and +3.1% y/y respectively. For construction specifically, both the hourly and weekly jumps were +2.9% y/y.

Table B-8 of the BLS’ report is only for production and nonsupervisory employees (i.e., it leaves out bosses). B-8 shows November’s economy-wide earnings at +2.3% y/y hourly and +2.6% y/y weekly. Construction has been doing better hourly, +2.7%, but worse weekly, +2.2%.

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.

ConstructConnect has now moved to a better-targeted and research-assigned ‘start’ date. Prior to January 2017, the ‘start’ date was recorded as occurring within 30 to 60 days of the announced bid date. In concept, a ‘start’ is equivalent to ground being broken for a project to proceed. If work is abandoned or rebid, the ‘start’ date is revised to reflect the new information.

Click here to download the Construction Industry Snapshot Package – November 2017 PDF.

Click here for the Top 10 Project Starts in the U.S. – November 2017.

Click here for the Nonresidential Construction Starts Trend Graphs – November 2017.

TABLE 1: VALUE OF UNITED STATES
CONSTRUCTION STARTS – NOVEMBER 2017
(CONSTRUCTCONNECT)

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

TABLE 2: VALUE OF UNITED STATES CONSTRUCTION STARTS
CONSTRUCTCONNECT INSIGHT VERSION – NOVEMBER 2017
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 – NOVEMBER 2017 – 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 nonresidential building and engineering (i.e., residential is omitted).

Data Source and Table: ConstructConnect.