The latest month's data lifted the Dodge Index to 153 (1996=100), up from a revised 148 for October. November qualifies as one of the stronger months of 2002, as six months of the year have seen the Dodge Index come in above its 2001 average of 149, while the other five months have been below that mark. "The construction industry in 2002 has essentially stabilized around last year's pace, although with a different mix by project type," stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction Dodge. "Single family housing has been robust, and public works has experienced further growth. At the same time, institutional building has witnessed a slight loss of momentum, and commercial building continues to show sharply reduced contracting compared to a couple of years ago."
Nonbuilding construction in November jumped 27% to $103.5 billion, bouncing back from its weak volume of the previous month. Highways and bridges climbed 20%, following October's 21% decline. While the public works sector occasionally shows wide swings on a month-by-month basis, some of the recent volatility can be attributed to political factors. Congress was not able to finalize fiscal 2003 spending levels by the start of the new fiscal year (October 1), and uncertainty in early October regarding near term financing for the federal-aid program caused some construction projects to be deferred that month. By mid-October, federal funding under the continuing resolution received greater clarification, and this helped the volume of new highway and bridge projects to rebound in November.
The sharp increase for nonbuilding construction in November was also the result of an 88% surge for electric utilities, boosted by the start of two large power plants in New York state (valued respectively at $500 million and $300 million), plus a large power plant in Florida ($191 million). Murray noted, "November turned out to be a strong month for new power plant starts, but the broad trend for this category still remains downward after the record high achieved in 2001." The environmental public works categories did not contribute to November's nonbuilding strength - water supply construction advanced just 1%, and both sewers and river/harbor development posted 14% declines.
Residential building, at $263.0 billion, was unchanged in November from the previous month. The dollar amount of single family housing was down 1% from October, while multifamily housing was up 1%. Single family housing in November was still robust by recent standards, helping the first eleven months of 2002 to be up 14% in dollar terms over the same period a year ago. Multifamily housing during the first eleven months of 2002 showed a dollar volume increase of 2%. Murray stated, "Single family housing has been a pillar of strength for the construction industry during 2002, with low mortgage rates boosting homebuyer demand. There's yet to be any sign of a construction slowdown, although a mild loss of momentum may emerge in 2003 should homebuyer demand be dampened by sluggish employment conditions." On a regional basis, November showed this pattern for residential building - the West, up 4%; the Midwest, up 2%; the Northeast and South Central, each down 2%; and the South Atlantic, down 5%.
Nonresidential building in November slipped 2% to $143.1 billion. The commercial categories witnessed generally reduced contracting, with declines reported by stores, down 5%; hotels, down 11%; and warehouses, down 12%. The office category in November was up a slight 1%, although its status can still be viewed as depressed - through the first eleven months of 2002, the dollar amount of new office construction was down 30% from 2001. Manufacturing plant construction in November continued to be very weak, sliding an additional 12%.
The institutional side of the nonresidential market showed a mixed performance. Educational buildings, the largest nonresidential category, retreated 2% in November. Murray stated, "School construction continues to be very strong, but a modest slowdown appears to be taking hold as states deal with tougher fiscal conditions." Also showing declines in November were churches, down 2%; amusement-related projects, down 28%; and public buildings (courthouses and detention facilities), down 35%. On the plus side, healthcare facilities in November maintained the strength shown throughout much of 2002, rising 3%. Transportation terminals in November jumped 64%, boosted by the start of a $227 million airport terminal project in Boston MA and a $91 million airport terminal project in Harrisburg PA.
During the first eleven months of 2002, the "no change" for total construction compared to 2001 reflected this behavior by major sector - residential building, up 12%; nonbuilding construction, down 6%; and nonresidential building, down 11%. The nonbuilding decline was the result of a 5% gain for public works being outweighed by a 44% drop for electric utilities. The nonresidential decline was due to a 22% plunge for commercial/industrial building being combined with a modest 1% retreat for institutional building. On a regional basis, total construction during the January-November period of 2002 showed this pattern - the South Atlantic, up 5%; the Northeast, up 5%; the West, up 2%; the Midwest, down 1%; and the South Central, down 10%.