June Construction Jumps 15%

New construction starts in June climbed 15% to a seasonally adjusted annual rate of $436.8 billion, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies.  The gain followed particularly weak activity in May, and helped the pace of contracting during this year’s second quarter stay close to its first quarter level.  June featured a substantial increase for the nonbuilding construction sector, led by the start of several large electric utility projects.  Nonresidential building also registered improvement in June, while housing edged up slightly.  During the first six months of 2011, total construction starts on an unadjusted basis came in at $198.2 billion, down 7% from the same period a year ago.

The June data lifted the Dodge Index to 92 (2000=100), which is the highest reading so far in 2011.  During the first five months of 2011, the Dodge Index had trended downward, moving from 91 in January to 80 in May.  “The pattern of construction starts during the early months of 2011 showed a loss of momentum, due largely to renewed weakness for single family housing combined with a pullback for public works and institutional building,” stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction.  “June’s gain enables the average for this year’s second quarter to be down a modest 2% from the first quarter, a milder slowdown than what was being suggested by the data through May.  The overall level of construction continues to be weak, but June’s gain is consistent with the sense that construction activity is hovering at a low level, rather than seeing further sustained declines.”

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